“The value of investments by public pension funds declined last quarter, widening the gap between what these funds say they will earn and what they actually make,” according to a recent article in The Wall Street Journal.

Each year, U.S. pension funds must estimate how much they expect to earn on investments, calculations which determine the amount of dollars that the respective government affiliated with it must channel in. If returns are high, the article explains, then required government support is reduced.

“But forecasts don’t always square with the funds’ actual experience,” the article says, adding that public pensions have “wide latitude in projecting investment returns” unlike corporations. The article cites data from Wilshire Consulting, an adviser to pension funds, showing that retirement plans across the country still project their investments will grow at a median annual rate of 7.25% but that yearly returns on public pension plans have returned a median 6.70% over the past decade and 6.49% over the past twenty years.”

According to Robert Waid, Wilshire’s managing director, “With all of the major asset classes falling, it was pretty tough for investors to have any positive returns. They didn’t have much of a chance to make money.”

The article points out, however, that government officials are not motivated to make returns assumptions more conservative: “Assumptions of high returns appeal to elected leaders because they reduce the amount governments need to set aside to cover pension promises.”