Long-term public sector pension returns hit all-time low

Finding stories about troubled public-sector pension funds is about as challenging as pulling a fish out of a stocked pond. Still, this one today from the Wall Street Journal (subscription may be required) is grimmer than most:

“Many states and local governments may be facing difficult choices if investment returns remain low,” said Keith Brainard, research director at the National Association of State Retirement Administrators. “The money has to come from somewhere.”

The story succinctly explains why long-term returns are so important, and why this latest development is bad news:

“The drop in 20-year annualized returns is significant because officials who oversee retirements for police officers, firefighters, teachers and government workers have long said one bad year or two isn’t as important as the long-term average, and they would earn enough money over decades to pay for retiree obligations.”

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