The city pension board must deal in reality
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Regarding the Aug. 24 article "City Pension Board Rejects Studying 'Realistic' Returns," I'd like to add my comment as a pension actuary with 35 years of experience.
Although there are differences between private and public pension plans, let me point out that, using rules recently rewritten by Congress, corporate plans are generally only allowed to use an interest discount rate of between 5 percent and 6 percent to fund their plans. These rates reflect corporate bond rates. So when Controller Michael Lamb proposes a study of 7 percent or 7.5 percent, even those lower rates may not be realistic.
I also find it interesting that the board members do not even want to see what the liabilities might look like under the new rates. This takes the concept of "ignorance" to new heights. How sad that the "leaders" want to ignore "reality" for their selfish purposes of making believe that some combination of higher taxes or lower benefits are not required. This is the opposite of "leadership."
I would like to learn where firefighters union president Joe King invests, so I, too, can enjoy an 8 percent yield, which he says is realistic over a long period.
Finally, you know you are in the realm of lame excuses when the defense is that other municipalities in Pennsylvania are equally dysfunctional.
First Published August 30, 2012 12:00 am