Update on Georgetown Employee Pensions

It was reported earlier, http://georgetownwatch.blogspot.com/2019/09/what-is-status-of-georgetown-employees.html, that the pension fund that Georgetown's employees invest in had a 5.36% return for the last reporting period.

John Mauldin, a financial advisor in Dallas has some inciteful comments about GEs recent changes to it's retirement plans that apply to all pension plans.

"I dug around and found the “expected rate of return” was 8.50% as recently as 2009, when they dropped it to 8.00%, then 7.50% in 2014, to now 6.75%. So over a decade they went from staggeringly unrealistic down to seriously unrealistic. They still assume that every dollar in their pension fund will grow to almost $4 in 20 years."

Of course, 6.75% is the assumed rate of return for the Texas Municipal Retirement System portfolio, which Mauldin identifies as seriously unrealistic based on history.

The reality is simple. Valuations are high and returns based on historical numbers do not suggest anything close to the 6.75% GE expects, let alone the ridiculous numbers public pension plans expect.

Historical returns based on 110-year models suggest future returns will be anywhere from -1.8% to +3.6%, from where we are today.

Read the entire article for more relevant analysis and information.