Comments for The Washington Post Tries to Scare You on Public Sector Pensions at http://www.cepr.net , comment 1 to 6 out of 6 comments http://www.cepr.net Thu, 20 Jun 2013 03:08:22 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/the-washington-post-tries-to-scare-you-on-public-sector-pensions#comment-19903 As we know that, Every one need money of his life wheither he is younger or elder when a person become so old he does not do hard work than what he should do to fill his requirements than his department or company where he did job they should help them by pension pension loan pension loans pension release - pension loan Mon, 29 Oct 2012 20:54:58 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-washington-post-tries-to-scare-you-on-public-sector-pensions#comment-19754 Brian, most companies pay out a large portion of their profits to shareholders as share buybacks. Basically, the portion that is not used for investment gets back in the hands of shareholders one way or the other. And, businesses are not directly investing 70 percent of their profits. (A 15 to 1 PE means that earnings are 6.7 percent of the share price.) If you want to assert that 2.0 percent is a realistic figure for economic growth, then you have serious argument with just about everyone in the forecasting business, since the average is around 2.4 percent over the long-term, somewhat higher over the next decade. The 7 percent return assumption is a nominal figure (actually they usually assume closer to 8.0 percent). - Dean Mon, 22 Oct 2012 08:13:33 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-washington-post-tries-to-scare-you-on-public-sector-pensions#comment-19748 As of September 30, 2012, the dividend yield of the Russell 3000, which represents 98% of the investable US equity market, was 2.02%. An expected 7% return on equity therefore implies real GDP growth of 5%. Of course, a more realistic figure for real GDP growth would be 2%. It could be less than 5% if the proportion of national income going to corporate profits were to increase, but is that at all realistic when politically there is already a lot of frustration about how much of the benefit of GDP growth in recent years has gone to capital as opposed to labor? The proportion of corporate earnings paid out as dividends could change but as Modigliani and Miller have shown, if tax policy is neutral it does not matter what firms' dividend policy is. In early 2002 Robert Arnott and Peter Bernstein argued that "real returns will probably be 2 - 4%". Even if the equity market does return 7%, is it realistic to assume that the typical retirement fund will be invested in 100% equity and zero in bonds? If we can be confident in 7%, shouldn't there be more lobbying to have Social Security invested in the stock market? - Brian Dell Sun, 21 Oct 2012 19:22:06 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-washington-post-tries-to-scare-you-on-public-sector-pensions#comment-19745 How do states get away with not making required pension fund contributions? I know they could simply not allocate the money for it, but shouldn't it violate the contracts they have with their employees? - Brett Sun, 21 Oct 2012 10:58:12 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-washington-post-tries-to-scare-you-on-public-sector-pensions#comment-19743 "The other part of this story is that workers did work for these pensions" Really this point, and the additional point that some state governments (IL, NJ) decided simply to not pay their fair share cannot be emphasized enough. Another important point is that at least in IL employees who have worked their entire lives in state government will NOT get social security. - Jennifer Sun, 21 Oct 2012 08:27:56 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/the-washington-post-tries-to-scare-you-on-public-sector-pensions#comment-19742 [quote]But even if states continue to make massive bets that the stock market will bail them out ...[/quote] It's amusing to see defined benefit plans getting bashed for outperforming the market and defined contribution plans touted for reducing unfunded liabilities by forcing losses on their holders rather than taxpayers, which is the opposite of their roles as designed by respective proponents. Either force the financial hucksters who peddle fearmongering on both sides of the scale while collecting huge risk free management fees to earn a living like everyone else who does face risk, or allow everyone else to earn a living on the same free ride they get. Now about that privatization of SS, you probably think it's a massive bet on the stock market but it's not. Here's a bridge for sale in the desert to prove it ... . - Last Mover Sun, 21 Oct 2012 08:25:20 +0100