Weather Forecast
55°, overcast
I saw this response to a simular comment made by a NY union boss regarding a stock market uptick.
"When Comptroller Thomas DiNapoli announced last month that New York’s state and local pension fund had earned 14.6 percent on its investments in fiscal 2010-11, the AFL-CIO’s Dennis Hughes said the the comptroller’s numbers had “call[ed] into question the need for so-called ‘pension reform’.”
This response was from a renown pension expert:
"Sure, we can expect (and hope) the markets rebound at some point. But Dennis Hughes fails to take into account two critical fundamentals. One is the idea of geometric growth. Let’s say I sit down to play poker with $1000 in chips. On the first hand, I lose 50% of them. On the second hand, I win 60% of my remaining chips back. Big hand! Only at the start of my second hand, I only had $500 in chips left. What’s 60% of 500? So I won $300 back and have $800 in chips in front of me. I’m still down, in other words. So even when the S&P bounces back, the New York State Pension Fund will still be underfunded due to outsize hits it took in recent bad years.
Same principals apply to Warwick's pension plans.
Please explain the inappropriate content below.