Wrong. Those kind of returns are actually achievable. The problem is that the state pension funds are run by politicians. They invest wherever the political winds blow, not where it makes good financial sense. No tobacco companies, divest from Israel, no gun makers, no alcoholic beverages, etc, etc. Oh, and by the way if the state needs money, we will sell the pension fund a bond. And, be sure that our "good friends" make plenty of commissions on the transactions.
And, even better, if we buy enough of the stock in any particular company, we want a seat on the board of directors and we will impose our political agenda on your business plan.
Over the long term, 7% is easily achievable. It should be more than possible to run the investment portion of the entire State of CA pension plan with nothing more exotic than a laptop, a brokerage account, and instructions to invest all of the money in a total stock market mutual fund.
Now there will be individual years when 7% growth is not achieved, maybe even two or three in a row, but over decades it has always happened.
The real issue is that there are insufficient opportunities for graft if the investments are made this way.
#53 I guess you are right as Social Security money is stolen every year by congress instead of remaining in the fund.
I have read about those in charge in Calif wanting not to get the best investment and investing in snake oil investments instead because it fits their agenda because they know they are set for retirement as the taxpayers are liable. The only way out is bankruptcy and that is happening in California cities.