There is no evidence that returns have been close to 7.5% over the last 15 years. Many pension funds still assume that unrealistic RoR of 7 to 8%. If benefits are inflation protected then this is a monster of a problem. The time to kill the taxpayer guarantees for these pensions is now. No bailouts of pensions.
Heavily unionized public employee pensions in States like CA and IL are going to bankrupt their States, but they do not care because they believe that they can raise taxes as much as they want, and if all else fails the Federal gov’t will bail them out.
You are correct, 7.5% returns is not realistic. In CA, where most of their revenue relies on capital gains of the few very wealthy taxpayers, all it takes is a sharp downturn in the stock market and it takes many years to make up the loss.