Letter to the Editor: Earnings in Wonderland

To the Editor:

One should not be the least bit surprised that a ridiculously optimistic and unrealistic return of 8 percent is being forecast as the future annual earnings on city pension fund money by Pittsburgh’s youth mayor, Luke Ravenstahl, and members of his pension board.

The rationale for such gross overstatement is transparent, and is, “If we forecast a realistic, lower rate of return for the pension funds, more money would have to be contributed to keep them solvent. We cannot ask city residents to pay more so we will overstate expected returns.  By the time this becomes a crisis, all of us will be long
gone from city government and we will not be accountable to anyone.”

That logic has worked for former Mayor Tom Murphy and other political “leaders,” so why not adopt it now so as to avoid having to properly fund city pension funds?

The question responsible citizens should be asking is why a group of political hacks with no demonstrated financial acumen are permitted to set the expected rate of return. Why are seasoned, independent finance professionals not charged with this duty?

I wonder if I can jump on board this flight of fantasy and be permitted to invest with a guaranteed 8% return at a time that bank deposits, including certificates and money market funds, are sporting yields close to zero. I would like the ability to enjoy Alice in
Wonderland, too!

Oren Spiegler
Upper St. Clair