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The hosts examine the growing pension funding gap: state and local pensions are $1.4 trillion underfunded, and many are using aggressive return assumptions (7-8%) that require permanent risk-taking. The reckoning will come as Baby Boomers retire.
This summary was generated from show notes and public descriptions, not from a full transcript review. Details may contain inaccuracies.
Canon
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The hosts argue that pension accounting presents a false self: stated funding levels of 80-90% assume 7-8% returns forever. The true self — funding levels calculated at more conservative returns (5-6%) — reveals that most pensions are only 50-60% funded.
Highlights
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State pensions are using 7-8% return assumptions that require taking risks most pension beneficiaries would never accept if they understood them
The hosts reveal that most state pensions assume 7-8% annual returns to appear fully funded. Achieving 7-8% requires heavy allocation to stocks, private equity, and alternative investments — exposing retirees' savings to risks they may not understand or approve of.Was this useful?