[quote=FlyerInHi]How are the pensions victims?
The booms and busts should smooth themselves out over time. So far the gains from the booms outweigh the loses of busts. Problem is the pension funds counted on the returns of the booms continuing. Bad forecasting on their part. Easy fix: increase contributions or reduce benefits.[/quote]
No, they don’t, not as far as pension funding is concerned. Yes, the public employers and pension fund managers/actuaries believed (or pretended to believe) that the outsized gains would go on forever, and they didn’t make provisions for when returns would dip precipitously — which would seem an obvious probable outcome after years of well above-average returns.
Bad planning, no doubt; but the pensioners are still victims of this nonsense because they had no choice as to the asset allocations of their pension funds, and were not able to convince their superiors that pension contributions should still be made even when the funds are earning above-average returns.
Additionally, the politicians made foolish mistakes WRT pension increases when employers were not making pension contributions and asset prices were peaking. Lots of very bad decisions were made…none of which were the decisions of rank-and-file public employees.
And yes, they will have to do both: increase contributions and reduce benefits, IMHO.
But let’s please not get this off-topic. There are plenty of other threads regarding this issue where it’s all be re-hashed over and over again.
