Dennis Leone warned about this years ago, didn't he?

From John Curry, May 1, 2012

http://www.dispatch.com/content/stories/local/2012/04/19/panel-leery-of-returns-of-public-pension-funds.html 

Panel leery of returns of public pension funds

By David Eggert
The Columbus Dispatch 
April 19, 2012

In the last six months of 2011, the investment portfolios of Ohio’s five public-pension plans took a hit — giving Republicans another opportunity yesterday to question the systems’ projections of 8 percent annual returns over the long haul.

The six-month returns ranged from minus 6.2 percent for the Highway Patrol Retirement System to minus 3.8 percent for the State Teachers Retirement System. Over 10 years, returns averaged around 5 or 6 percent a year.

Those numbers caused members of the Republican-controlled Ohio Retirement Study Council to again question whether the funds are being realistic when assuming 8 percent yearly returns over a 30-year period.

Mike Nehf, executive director of the teachers’ fund, which covers nearly 470,000 educators and retirees, responded that all the plans have seen 8 percent or higher returns the past 25 to 30 years. The reason for lower returns the past 10 years was a “1 in 100-year negative performance,” he said, referring to 2008.

The retirement systems relied on the long-term projections when drafting proposals more than two years ago to ensure the long-term solvency of the funds, which have $163 billion in assets covering more than 1.5 million public workers, retirees and their beneficiaries. Those plans could receive votes in coming months from the state Senate. Proposals include higher retirement ages, lower cost-of-living adjustments and bigger deductions from employee salaries.

Rep. Lynn Wachtmann, R-Napoleon, expressed concern that the pension funds’ 10-year annualized investment returns were about 5 percent.

“They did not meet expectations,” he said.

The council of legislators and gubernatorial appointees hired an independent actuary to review, among other things, the systems’ economic assumptions. A final report is expected this summer.