The problem with the defined benefit pension plans for government employees used by most states has been ably described by AT News Editor Ed Lasky on many occasions. Basically, as this Reason Magazine article points out, the problem is in the difference in accounting practices between public and private plans:Pension funds need to assume a certain rate of return on their current assets in order to gauge whether or not the assets held today will be enough to pay future benefits. Obviously, the assumed interest rate or rate of return has a major impact on whether a pension plan is adequately funded. Most pension plans would rather play it conservatively and assume a lower rate of return, so that they ensure that the assets they have today will be enough to cover tomorrow's promised benefits. But the states would rather put less money up front today, so they're pinning all their hopes of being able to pay benefits tomorrow on an 8.5 percent annual growth rate. If that 8.5 percent growth...(Read Full Post)