Marginal Revolution: "How to discount pensions" reviews how the Dutch calculate their pension obligations. "But all economists now agree. The expected-return approach is a huge economic offense, hurting younger generations.”
Simply put, when future pension payouts are projected to fall short, the pension operator (such as CALPers) is supposed to increase the required contribution percentage. But they hate to do this because it always causes a huge political backlash. So instead they just say: "Hey, we project the fund will grow by 20% a year forever" and problem solved...until the future generations come looking for their "guaranteed" pension.
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