Finally
there is talk about state and city government pension
problems being severe enough to be a major factor how these
entities are being rated by credit agencies. The higher the ratings,
the lower the cost of running state and local governments.
We know that state and local pensions are underfunded. That is, there are not enough earnings to warrant the amount of pensions promised.
You cannot assume you will earn 8% or more on pension investments when you can safely get only 3% or 4% from those investments. So politicians will have to learn to promise less and even reduce pensions, or invite bankruptcy. The latter will perform the necessary reduction whether the pensioners like it or not, so why not have everyone come to a voluntary decision to get pension matters settled? (See the Earl J. Weinreb NewsHole® comments.)
We know that state and local pensions are underfunded. That is, there are not enough earnings to warrant the amount of pensions promised.
You cannot assume you will earn 8% or more on pension investments when you can safely get only 3% or 4% from those investments. So politicians will have to learn to promise less and even reduce pensions, or invite bankruptcy. The latter will perform the necessary reduction whether the pensioners like it or not, so why not have everyone come to a voluntary decision to get pension matters settled? (See the Earl J. Weinreb NewsHole® comments.)
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