The problem with both the defined benefit and defined contribution plans is that we do not put enough money in them. The primary difference between the plans is who we blame for not having enough funds.

EVEN WITH ROSY ASSUMPTIONS, public pensions are deep in the red. “A 2010 Pew study on public pensions nationwide put the funding gap at about a half-trillion dollars based on states’ own assumptions. But Novy-Marx and North western University’s Joshua Rauh say it’s $3 trillion using a risk-free discount rate.” I think a 4% rate is realistic. But note how bad things look assuming even a 6% return.

EVEN WITH ROSY ASSUMPTIONS, public pensions are deep in the red. “A 2010 Pew study on public pensio…
Glenn Reynolds
Sun, 27 Mar 2011 01:55:48 GMT