RE: For so many years, 6-8% has been used for growth projection assumptions
And what do they base this assumption on?
I believe those figures are based upon the average historical growth in equities (somewhere around 7%).
Extrapolating, a conservative investment in an index fund should generate about 7% annually, doubling your principle investment about every 10 years (Rule of 72). Unfortunately, I don't think the stock market's been anywhere near this level on either the current 5- or 10-year return rate.
“RE: For so many years, 6-8% has been used for growth projection assumptions
And what do they base this assumption on?”
I received a letter and a check from a former employer when I was in my mid 50’s. It seems the employer had decided to cash out its pension plan. The check covered the equivalent of 3 years worth of benefits. My life expectancy per the actuarial tables at age 65 is 17 years. It seems Mr. Boehner slipped a provision in a bill in the mid 2000’s allowing private pension plans to use an 8% discount rate when calculating payouts when ending plans. Of course it doesn’t matter that there is no place I could invest the lump sum and realize a guaranteed 8% annual return.
At that point I knew the Republican Party was a tool of multinational corporations. It has zero interest in the average citizen and when given a choice between supporting the goals of big donors or protecting the rights of citizens it will always choose the former.
When I joined the former employer (nonunion salaried employee in a “right to work state”) I accepted the lowest salary I was offered at the time (i had 3 competing offers) because the employer had good benefits and a good reputation for treating employees well. It also had a reputation for paying low salaries but it was understood the benefits offset the lower pay. I viewed employment as a contract. I performed my job in exchange for salary and benefits, with some of the benefits (pension) delayed to a future date. Whether or not the corporation put aside the savings on my lower than market salary isn’t the point. It was their obligation to provide the benefit if I performed in my job.
Many private companies failed to set aside sufficient funds to pay employee benefits resulting in the unfunded pension liability situation which is similar to the issue in the public sector. Essentially Congress has allowed the employer to escape paying a substantial amount of the deferred benefits. This is equivalent to stealing the work I performed in exchange for these benefits. This is one more example that contract law no longer exists in the politicized legal environment. Just as the federal government stole from the GM bondholders to benefit the unions during the bankruptcy, in this instance Congress is allowing big corporations to pay out pension benefits for pennies on the dollar. The result is higher reported profits and increased bonuses for current management at the expense of those who did not receive full compensation for their labor.