Take a look at the Pension Growth graph below and how it represents the 8.16% Actuarial Rate nice and smooth. The reason I like the graph so much is because it is simple. It is just a smooth growth that does not care about assumption or Inflation factors. It all actuality that 8.16% is the allinclusive number, so why are the pension audits and the explanations that people give about them always trying to lose us with additional numbers and factors?
Look at the 20 Net Return on Assets picture above to the right that shows an annual 10.10% return on investments. If that data was added to the graph on the left the line representing 10.10% it would show that 600 million dollars more was earned for the pension than the 8.16%. Then if you add some more money because of the unfunded future pension obligations (UAAL) like I did the pension should have earned a billion dollars more than the 8.16% would have. I have made my own work sheet showing the differences between Santa Barbara County’s Pension Assumptions and the SBCERS Pensions Actual Performances.
I have two other work sheets showing assumptions v. actual earned return average. 19892008 9.6% represents the 20 YEAR NET RETURN ON ASSETS and 19882011 8.5% represents 24 YEARS of NET RETURN ON ASSETS both sheets can be found further down this posting.
20 YEARS OF SANTA BARBARA COUNTY’S ECONOMIC ASSUMPTIONS
v. ACTUAL (SBCERS) PENSION FUND PERFORMANCE 19882007

1Using assumption factor; $270,540,000 X 8.15% (A) X 20 years = $ 1.34 billion dollars.
2 Using Actual Performance Factor; $270,540,000 X 10.10% (E.) X 20 years = $1.94 billion dollars,
3Same as example 2 plus a monthly deposit; Again a starting value of $270,540,000 but adding a monthly (H) deposit of 580,000 X 10.10% (E) X 20 years = $2.37 billion dollars.
America how are our pensions earning more than they wanted (8.16%), contributing more than the normal rate( 4.02%) of County’s yearly payroll for the entire 20 year period 19882007 and claim to have a Billion dollar unfunded deficit? I have just done the math that shows a Billion dollar surplus would have been earned, WAKE UP AMERICA!
S.B.C.C.C. The place where COMMON SENSE never goes out of style!
The other work sheets 9.6% represents the 20 YEAR NET RETURN ON ASSETS 19892008
20 YEARS OF SANTA BARBARA COUNTY’S ECONOMIC ASSUMPTIONS
v. ACTUAL (SBCERS) PENSION FUND PERFORMANCE 19892008

1Using assumption factor; $270,540,000 X 8.12% (A) X 20 years = $ 1.3 billion dollars.
2 Using Actual Performance Factor; $270,540,000 X 9.60% (E.) X 20 years = $1.765 billion dollars,
3Same as example 2 plus a monthly deposit; Again a starting value of $270,540,000 but adding a monthly (H) deposit of 666,000 X 9.60% (E) X 20 years = $2.23 billion dollars.
19882011 8.5% represents 24 YEARS of NET RETURN ON ASSETS
SBCERS 24 YEARS of ECONOMIC ASSUMPTIONS
v. ACTUAL PENSION FUND PERFORMANCE 19882011

1Using Assumption Factor; $270,540,000 X 8.10% (A) X 24 years = $ 1.82 Billion dollars.
2 Using Actual Performance Factor; $270,540,000 X 8.50% (E.) X 24 years = $1.99 Billion dollars,
3Same as example 2 plus a monthly deposit; Again a starting value of $270,540,000 but adding a monthly (F) deposit of 1,008,000 X 8.50% (E) X 24 years = $2.91 Billion dollars.