Bringing Arithmetic to Public Pensions

The NYT ran a column by former Los Angeles Mayor Richard Riordan and Tim Rutten which purports to present a plan to "avert the pension crisis." The piece hugely exaggerates the funding problem faced by pensions because of a simple logical error in its assessment of discount rates.

At one point it tells readers:

"America’s state and municipal pensions concede that they are underfunded by more than $1 trillion. If a more realistic expectation of returns on investment is pegged at 5 percent, the...