Fantasy finances

Here's an interesting tidbit from this WashPost article "Pensions squeeze government budgets." Over two-thirds of the largest public pension plans assume a rate of return of 8% or greater, while the S&P average annual growth for the past 20 years has been less than 6%.

Just last week, the nation's largest public pension plan - California's CALPERS - voted down the recommendation of it's own chief actuary to adjust the plan's investment forecast to 7.5%. CALPERS stuck with their 7.75% expected rate because lowering the estimate would mean that California towns and cities would be on the hook for millions of new contributions. So they embraced the fantasy of unrealistic returns.

The California voters, it seems, are getting concerned.