What happens when 6.65% is missing?

01-26-2012 • The Political Commentator

If we're talking about 6.65% of the body weight gained by a supermodel during pregnancy then that's a good thing (and a good start)! But if it's a pension fund missing its return assumptions by 6.65%, then that's not so good! This is a follow-up to the article "The Public Pension Time Bomb!" that discussed the ballooning pension liabilities of towns, cities and states who also faced with shrinking tax bases, shrinking tax receipts, shrinking state and federal reimbursements and rising costs. In addition to being reliant on new funds from now less plentiful sources, these pension funds operate under annual percentage return assumptions that need to average a certain rate far into the future so that those returns together with paid-in money will be sufficient to meet that funds obligations. Well what happens if those annual percentage returns miss by a country mile or even worse the fund suffers losses significant losses and when there are gains they are miniscule? Where will th