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$16B Pension Gap in Arizona is Really $37B

Arizona’s government pension funds use a discount rate of either 8 or 8.25 percent, considerably higher than the 5 percent they have actually earned over the last decade. Consequently, while Arizona’s unfunded pension liabilities are officially $16 billion, a huge sum, the unfunded liabilities using the actual rate of return of 5 percent are more like $37 billion. That’s $5,800 for every man, woman, and child in the state.

We are being misled about the health of our pension systems but the legisalture could put a stop to that by requiring a lower discount rate be used to calculate funded levels. If pension funds expect taxpayers to pick up the tab, the least they can do is be straight-forward about the bill we’re facing.

Source: Goldwater Institute. Read full article. (link)

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  • Sevo||

    "Arizona’s government pension funds use a discount rate of either 8 or 8.25 percent, considerably higher than the 5 percent they have actually earned over the last decade."

    And Ben is going to make sure the returns are really a minus by the time inflation is included.

  • johnl||

    8.25 is such a joke rate, why not assume whatever rate is required to make the pension funded?

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