The Pension Questions Still Not Asked
So, I’m watching General Treasurer Raimondo’s speech upon accepting the Manhattan Institute’s Urban Innovator Award (via Ted Nesi). She keeps talking about “solving the problem” and “fixing the pension,” and some of the inevitable questions had to do with “what’s next” — the assumption being that the state pension problem is fixed.
Still, I don’t hear anybody asking two very important questions:
- You mentioned that you began with a $7 to 9 billion unfunded liability and that your reform saved taxpayers about $4 billion. Where is the other $3 to 5 billion going to come from?
- The gentleman who introduced you noted that the state had been assuming a rate of return (discount rate) of about 8% while achieving 2%. You said you’ve adjusted the assumption to 7.5%, yet you answered a previous question by admitting that neither the 10 year nor the 20 year returns hit that number. What happens when the number has to be adjusted down again, thus multiplying the annual payment required?