Posted by Lou on March 8, 2016
There are multiple reasons for this, but it basically comes down to a combination of two factors.
1) Negative cash flow – Due to the age of the system and previous generosity to people who weren’t contributing and/or early retirements, the fund pays out more in benefits than it receives in active employee contributions.
2) Underperforming investments – The pension fund return on investment over the last five years has been 9.77%, but the S&P 500 (an index of 500 large corporations considered the best respresentation of the stock market as a whole) has increased 14.1%. Ted Siedle will be specifically investigating the real estate portion of the pension fund investments in an upcoming investigation.
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