A couple weeks ago CalPERS and other government pension funds released glowing reports about their earnings, which had “soared” in the last fiscal year. Most pension funds reported in excess of a 20% return on investment. The inference was that the pension managers were back in the saddle, riding great returns to pension fund recovery.
The unions and their apologists went into full attack mode, ridiculing those who have been expressing deep concerns about defined benefit pension plans and the lackluster returns this past decade (among several others problems) — when pension funds averaged under 6% returns per year.
The pitch from obnoxious labor posters and bloggers has been that “happy days are here again,” and that essentially we can now look forward to a string of similar annual returns that will make up the massive unfunded liability deficit that ALL such funds face.
Gee — what a difference two weeks makes. At this point, the stock market has lost all gains since the beginning of the year — and then some. Yesterday’s 500+ point DJIA drop was only the latest down day — though (so far) by far the biggest.
The obnoxious crowing and braying by the union hacks has abruptly stopped. They’ve gone dark.
Granted, the market may come zooming back. In spite of (or perhaps as a result of) working 20 years as a stockbroker, I have no clue what’s coming — especially in the short term.
But the point is that whenever there is a pension shortfall, the taxpayer is legally ONE HUNDRED PERCENT responsible for making up the deficit. In essence, we are all invested in the government pension funds as sad sack 401k participants — we get the bill for sub-projection performance, but not the benefits.