These formulas should not be dependent on magic and gambling luck at the casino of risky bets, these are just simple math based calculations. Want pensions to keep promises? Stop pretending and extending. Start factoring in today’s realistic return targets of 3-4% a year (not the pie in the sky 7-8% still commonly used), and increase employer and employee contributions to catch up the deficits. Yes it means less corporate profits and household spending today in order to save for tomorrow. That’s where savings come from: present consumption denied. Time to sober up.
Ivan Osorio, Competitive Enterprise Institute Policy Analyst, and Karen Friedman, Pension Rights Center Executive Vice President and Policy Director, discuss the current state of pensions in the U.S. and what can be done in the future. Here is a direct video link.