Latest / The Fiscal Policy Podcast with Fexingo: Government Budgets, Stimulus, and Public Spending
Why Government Pension Math Is So Confusing
State and local pension funds are a perennial worry, but the real story is the assumptions baked into their math. In this episode, Lucas and Luna dig into the discount rate—the number that decides how much a pension fund needs today to cover promises decades out. They look at why a one-point change in that rate can swing a fund's shortfall by hundreds of billions, and they trace the politics that keep rates stubbornly high. They also explore what happens when funds assume they'll earn 7 percent and the market gives them 5, and why some cities are turning to risky assets to chase the…
The skinny
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