Another study by Independent Institute Senior Fellow Lawrence J. McQuillan noted that over the last 20 years, “for every dollar paid in CalPERS pension benefits, CalPERS’s employer members contributed 21 cents, employees contributed 15 cents, and the remaining 64 cents came from investment earnings.” In other words, historically, 64 percent of the funds paid out rely on the performance of capital markets. Given the zero interest rate or ZIRP policies of the Federal Reserve and that the Standard and Poors 500 Index has struggled to produce 4% annualized returns including dividends since 2000 it doesn’t take much to realize that the pension problems are acute and growing rapidly. A direct by product is that savers, particularly pensioners and those on a fixed income, are punished and speculators rewarded compliments of ZIRP. Another study by the Stanford Institute for Economic Policy Research (SIEPR), noted the unfunded obligation levels for the Big Three pensions in CA were as follows: $169.8 billion for CalPERS, $104 billion for CalSTRS, and $16.8 billion for UCRP as of 2011, hardly trivial numbers. The entire piece on pensions can be found here.
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