tag:blogger.com,1999:blog-1797875972831999598.post8559823027214434156..comments2023-11-22T04:27:07.521-06:00Comments on glen brown: Cash-Balance Plans: Just Another Form of Pension Cuttinggbrownhttp://www.blogger.com/profile/13435049339082622611noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-1797875972831999598.post-30793302707220451722013-02-15T11:53:59.318-06:002013-02-15T11:53:59.318-06:00Data from TRS as of 12-31-12
FY12 gross return (s...Data from TRS as of 12-31-12<br /><br />FY12 gross return (six months): 7.7%<br />2012 gross return (one year): 14.6%<br />2010-12 gross return (three years): 10.1%<br />gbrownhttps://www.blogger.com/profile/13435049339082622611noreply@blogger.comtag:blogger.com,1999:blog-1797875972831999598.post-81789535515795457972013-02-14T13:50:08.835-06:002013-02-14T13:50:08.835-06:00"The liability for a traditional defined-bene..."The liability for a traditional defined-benefit plan is easily matched by bond investments, making risk-reduction cheap and easy." That is precisely what our state pensions do NOT do. They are invested primarily in stocks and other riskier assets. The longest dated risk free bonds currently yield 3.19%. Plug that into pension assumptions instead of the current 7.5% assumption and Illinois' unfunded liability approaches $300B, which is far, far beyond fixable. This is exactly why critics of defined benefit plans despise them--they guaranty pensioners a fixed amount but the funds are not invested in assets reasonably expected to support that guaranty, and cannot be because the cost would be astronomical.Mark Glennonhttps://www.blogger.com/profile/13159847482348082245noreply@blogger.com