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Walter Russell Meade spills it:

The bad news is that corporate and public pension plans are horribly and perhaps irredeemably underfunded.  Years of lies, accounting sleight of hand and unrealistic assumptions about returns have now reached the point where private final salary pension programs in the US are now underfunded by about half a trillion dollars.  Small change compared to US public sector pensions, where the pension gap at over $4 trillion is eight times the size, but it looks increasingly as if a lot of people aren’t going to have the money they’ve been told to expect.

That’s the bad news.  The really bad news is worse.  According to the same issue of the Economistreturns on all classes of assets — stocks, bonds, real estate, commodities — could be depressed for years.  Since many pension organizations (and especially the ones in government where they don’t go to jail for using cockamamie accounting assumptions to deceive the public about their financial position) are still using assumed rates of return that are much higher than those financial experts now think likely, the pension gap is likely to grow rather than shrink in years to come.

So your pension is in jeopardy, your portfolio has taken some big hits, and no matter how much you (or your employer) socks away, you won’t get much return on your savings.

What to do?  Walter gives some advice.

It gives one pause:  A $4 trillion gap in what government accounting assumptions say is owed to public pensioners and what, based on the current market, it will actually owe.  Then add that figure to the official federal deficit and try to figure a way out.

But don’t worry, I’m sure David Gregory is on it.

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