Why CalPERS cannot expect years of high returns

To the editor: I take great exception to your editorial assertion that “good times almost certainly will roll again,” implying that the California Public Employees’ Retirement System will once again generate 7.5% annual investment returns. (“Another bad year for CalPERS,” editorial, July 27)

Many noted economists believe that, similar to Japan in 1990, we are in for low economic growth rates and very low interest rates for the foreseeable future. This means low bond returns.

As a sanity check on the CalPERS’ 7.5% assumption, the Pension Benefit Guaranty Corp. tells private industry to assume a rate of 4% for future investment returns.

The public sector unions do a great disservice to California taxpayers by encouraging CalPERS to high-ball its future projected investment returns since taxpayers are required by law to make up for any shortfall in returns that CalPERS might experience. The vast majority of California’s taxpayers know nothing of this potentially huge tax liability.

Eddie Dawes, Hacienda Heights

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To the editor: The Times does a nice job outlining the dynamics of pension finance. However, there may not be an easy solution to “defined benefit” pensions.

Local governments are already strapped. Illinois is on the verge of bankruptcy. There is no such thing as a free lunch, unless you believe Bernie Sanders.

If the system is to survive, employees will have to pay more. Eventually “defined benefit” will have to become “defined contribution.” The public sector will have to follow the private sector on pensions.

Our politicians need to show some leadership and stop kicking the can down the road.

Barry F. Chaitin, Newport Beach

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