Quote:
Originally Posted by mwadswor
There's this thing called investment... it tends to make money grow faster than it otherwise would without raising taxes or cutting services.
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The future value of money is basically the result of the cumulative investment of an entire economy. The larger your pool of funds, the harder it is to beat that, and the more important the funds are, the smaller the tolerance for risk for the investor(s) and the lower the possible return is. It's critical to remember that hindsight is always 20/20 but foresight is never certain.
Besides, investment might be part of the answer for a pension that is fully funded from day one, but the State of Illinois pensions including the CTA pensions are NOT fully funded, which means at some point they will have to be paid for from general revenues.
Finally, the pensions are, as far as I know, fixed monthly benefit, based on what the people earn at retirement, but not fixed contribution and not fixed in length. That means that regardless of what investment returns are, the state still has to pay out a certain amount. Over the long term, in theory, that could even out. However, I have my doubts that it does even out in practice for most pensions. This is why most private companies have done away with pensions. If even private companies, who one would think understand the idea of investment better than most governments do, don't think pensions can work, then I really don't see why you're grasping at straws defending "investment" as the answer. "Investment" is a nice buzzword learned in Econ 101, but in the real world even experts don't always pick winning stocks, and there are plenty of losing investments that, even in good times, partially offset the winning ones. You can't point to the results of Goldman Sachs or 2009 Citadel as what government pensions should be doing any more than you can point to Ferrari when your Ford Escort fails to dazzle you with accelleration. "Planning" on stellar performance isn't a real plan.