Here is the scary bottom line:
In other words, Boston College found that unfunded liabilities may be almost double the official estimates despite applying a lower return assumption to just a piece of the overall calculation (in addition to eliminating asset smoothing). ....
For local and state government pensions and other post-retirement benefits, I suggest a rough rule of thumb of doubling the shortfalls found in official reports. Reality may prove worse than that, but let’s be optimistic.
We have blogged about over-optimistic pension assumptions. I hope I never have to tell our Mayor, "I told you so."