There is a political reason for this. US leaders exempted taxpayer funded defined benefit pension plans from any rules or regulations, but subjected non taxpayer DB pension plans to strict rules and regulations (ERISA 1974 and PPA 2006).
This means GE’s pension plans have to use conservative assumptions and conservative investments, which is all well and good. As an example, GE is required to use the yield curves of high grade corporate bonds to calculate pension liabilities (~4% and lower in recent history).
But for decades, taxpayer funded pensions have been playing fast and loose, assuming enormous return on investments (~8%), underfunding the pensions (to keep taxes low), and of course, investing in riskier and riskier assets to try to make up for the previous years’ of underfunding and corruption.
Of course, politicians want to keep kicking the can down the road, and the best way to do so is to keep deflating the dollar and inflating asset prices. It is not politically feasible to cut defined benefit pension amounts, but it is politically feasible to satisfy the nominal benefits promised while providing a much lower real benefit (i.e. one with reduced purchasing power).
This means GE’s pension plans have to use conservative assumptions and conservative investments, which is all well and good. As an example, GE is required to use the yield curves of high grade corporate bonds to calculate pension liabilities (~4% and lower in recent history).
But for decades, taxpayer funded pensions have been playing fast and loose, assuming enormous return on investments (~8%), underfunding the pensions (to keep taxes low), and of course, investing in riskier and riskier assets to try to make up for the previous years’ of underfunding and corruption.
Of course, politicians want to keep kicking the can down the road, and the best way to do so is to keep deflating the dollar and inflating asset prices. It is not politically feasible to cut defined benefit pension amounts, but it is politically feasible to satisfy the nominal benefits promised while providing a much lower real benefit (i.e. one with reduced purchasing power).