PUBLIC PENSION CRISIS: Passing the Disappearing Buck.

Welcome to the village of La Grange, IL., where local officials hope that more than just the good among their peers do indeed die young. At least, that’s what their pension plans indicate. . . .

Basically, the outdated tables don’t factor in the increases in life expectancy. In La Grange, the switch to the more recent mortality tables saw the village’s minimum required contribution increase by 20 percent. At the same time, in order to keep their funded statuses within reason (often while increasing future outlays), pension funds use estimates of expected investment returns that are at best Panglossian and at worst criminally deceptive. . . .

To put this in context, an average diversified portfolio yielded only “a 2.6% net annualized rate of return for the 10-year time period ending Dec. 31, 2013.” The disparity between projected and actual returns is dire, and means that any estimation of pension liabilities is understated.

In the private sector, such a shuffling of assets, or passing of a disappearing buck, is known as a Ponzi scheme. Meanwhile, union bosses—who purport to care deeply and singularly about the protection of their employees—continue siphoning assets from the drying well, hoping their day of retirement comes before the day of reckoning.

Reckoning day — put your money in the mattress.