What Ponzi Scheme? Public Pensions Average 0.6% Return In 2016 Despite 7.6% Assumption, by Tyler Burden

Send not to know for whom the bell tolls, it tolls for state and local pension funds. From Tyler Durden at zerohedge.com:

We’ve frequently argued that public pension funds in the U.S. are nothing more than thinly-veiled ponzi schemes with their ridiculously high return assumptions specifically intended to artificially minimize the present value of future retiree payment obligations and thus also minimize required annual contributions from taxpayers…all while actual, if immediately intangible, underfunded liabilities continue to surge. 

As evidence of that assertion, we present to you the latest public pension analysis from the Center for Retirement Research at Boston College.  As part of their study, Boston College reviewed 170 public pension plans in the U.S. and found that their average 2016 return was an abysmal 0.6% compared to an average assumed return of 7.6%.

Meanwhile, per the chart below, the average return for the past 15 years has also been well below discount rate assumptions, at just 5.95%.

All of which, as we stated above, continues to result in surging liabilities and collapsing funding ratios.

All of which, as we stated above, continues to result in surging liabilities and collapsing funding ratios.

But, perhaps the most telling sign of the massive ponzi scheme being perpetrated on American retirees is the following chart which shows that net cash flows have become increasingly negative, as a percentage of assets, as annual cash benefit payments continue to exceed cash contributions.

To continue reading: What Ponzi Scheme? Public Pensions Average 0.6% Return In 2016 Despite 7.6% Assumption

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