State Budget Solutions put out its most recent list of tricks used to hide the true cost of public pensions. It builds upon their list from 2013. Policymakers and key advisors use many of the tactics they identified to confuse or hide the unsound fiscal problems of government sponsored retirement systems reform. Indeed, while investment strategies and returns are often blamed for underfunded systems, other assumptions and models often have just as much (or more) bearing on whether a pension fund will be able to provide a secure retirement to all its employees for decades to come. Some of the examples include:
- Outdated Life Expectancy Assumptions
- Inflated Discount Rates
- Overly Aggressive Investment Assumptions
- Underfunding Pension Contributions
Authors Joe Luppino-Esposito and Bob Williams write, “Those who control the levels of benefits are politicians who must worry about re-election. This is not a system that rewards future planning over present results. If politicians were divorced from the process and employees and retirees had control over their retirement, a good number of these gimmicks would not be necessary to have a sustainable system.”
Read the complete list here.
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