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Contra Costa Taxpayers Association

Debate Heats up over public pensions and the assumed rate

07 Feb 2013 11:15 AM | Jessica Wagner-Weir (Administrator)
Why is that rate so critical?  Because if it is too high (such as Contra Costa and its 7.75%) then too little is collected from the employees and the employer on the assumption that earnings will cover more of the ultimate pension cost.  In Europe they are using on the average of 3-4%.  In the US, a tidal wave was set off when Indiana had the temerity to go down to 6.75%.  But the underfunding is rapidly sucking the life out of local and state budgets.

See this great article in Institutional Investor:

http://www.institutionalinvestor.com/Article/3150302/Investors/Debate-Heats-Up-over-Public-Pension-Fund-Discount-Rates.html?ArticleId=3150302&p=3#.URP-D6U738c

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