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Rate of Return Crucial in Retirement Plans
Pittsburgh Post-Gazette
July 27, 2008
Excerpt: Generous return assumptions came under fire recently from Berkshire Hathaway Chairman Warren E. Buffett. In his annual letter to shareholders, Mr. Buffett observed that the average Standard & Poor's 500 member sponsoring a pension plan assumes annual returns of 8 percent. Considering that their average plan allocates 28 percent to bonds and cash, which typically do not earn more than 5 percent, Mr. Buffett calculated the remaining 72 percent invested stock and other asset categories would have to earn 9.2 percent to meet the 8 percent goal.
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