The Great Pension-Bonus Giveaway Fiasco - Bloomberg:"I’ve been shocked to find out how common “extra payments” or “13th checks” have become among public pension funds. Basically, when returns were higher than the projected average return (generally around 8 percent), they funneled off the extra into a bonus check.
This is … well, gee, profanity is too weak.
It is an insane mangling of the concept of an “average return.”
As should be obvious to anyone who sat through high school math, that average is composed of some years when the return will be higher than the average, and some years when it will be lower.
You can’t siphon off the “excess” returns from the up years unless you also put in extra cash during years when the market underperforms.
It goes without saying that they did not top up during the bad years.
The result is the current mess in Detroit, and elsewhere."
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