I don't quite understand their math and their high finance: In the past decade, SPY's CAGR was ~14.5%, QQQ is even better, so even if bond yield is ~0%, with a 60/40 mix of SPY/30 yr bonds, the pension funds should still return >9%. With inflation near non existence tell me again why would the pension funds faced a crisis unless they don't put any new $ into the funds over the years as required?
I think your second to last sentence assumes scale economies that I'm not sure are there. If you're investing a typical pension fund mix than $100M or $1B you're going to get pretty close to the same returns at the same cost and nothing stops smaller pensions from joining together to hire one management team. And with the exception to SS you're not supposed to be Ponzi funding current retirees with current worker's contributions, they have pretty strict rules about funding levels versus liabilities. The only similar issue would be pensions where the sponsor company goes out if business, because companies can and do contribute extra to pensions that become underfunded for whatever reason (worse than anticipated returns, for example) and they're no longer able to do that if they're not around. But those extra contributions come from corporate treasury, not current plan contributor's contributions.
Grulstmrnn: I see your ass has been banned. What a shame. Who is going to tell everyone how great the masters program is at Trump University??
Seriously, banned again? I mean since I've been here the guy's been banned first as volpunter, then asiaprop, and now Grulstmrnn, and I think he had some previous lives before I was here. That's got to be a record for pathetic!