Low investment returns taking a toll on U.S. pension funds

Reuters reports:

For the second straight year, U.S. public pension funds have fallen well short of their investment targets, swelling their vast unfunded liabilities and placing a greater burden on municipalities to offset the underperformance through increased contributions, estimates show.

The funds, which guarantee retirement benefits for millions of public workers, logged total returns of around 1 percent for the fiscal year ending June 30, while private pension funds earned more than triple that, according to preliminary estimates from consulting firms Wilshire Consulting and Milliman, respectively. Those figures could change as complete data for the period becomes available.

That is a poor showing relative to the 7 percent or more that pension funds seek to earn annually.

The shortfalls could add fuel to the growing debate about the long-term viability of public pensions - which financier Warren Buffett once referred to as a "gigantic financial tapeworm."

Thanks Federal Reserve for destroying the money market!