Reuters Column Strikes Out on Pension Math

Allison Shrager's Reuter's column on the problems facing public pensions badly misled readers. It noted the pensions reported funding ratios and then told readers:

"But these estimates rely on the assumption that pension assets will earn at least 7 percent to 8 percent each and every year."

This is absolutely not true. The estimates only assume an average return in the range of 7-8 percent. If returns fall below this for a year or two, to stay on target the fund will have to achieve higher r...