Tuesday, May 29, 2012

Average pension fund returns assumptions stuck at 8%

Via my colleague, Steve Allen: apparently the average public pension fund assumes a return of 8%.  As I've talked about before - pension funds should actually have two return assumptions - a rate for the return of the assets in the portfolio and a rate for finding the present value of the liabilities.  The latter should be basically the risk free rate.   Based on this, even fully funded pension funds that assume higher rates are not really fully funded.

All my pension fund posts are grouped under the label "pension funds"