No. of Recommendations: 3
What are you complaining about, then? The NPV of a $40K per year annuity is about $700K, give or take.
Remind me to sell you retirement products, since you seem to be okay with a rate of return that doesn't come close to keeping up with inflation.
It is a retirement system. The reason that it's structured as a pension, rather than as a self-directed fund, is because they don't want to get stuck holding the bag for people who take a lot of risks and end up with too little money. The whole point is to prevent people from not having enough to avoid abject poverty in their old age. That means modest - but certain - returns.
Sure. 1.2% is certainly...certain.
But considering the average yield of 30 year Treasury Notes is a little more than 3.5%...you're paying at least 2 points for your "Certainty". Which means that your 2+ points are going to fund somebody else's retirement, which is what I said.
