Amid fears of a world recession, the pension time bomb is ticking louder. Financial experts warn that the coming pension crisis is of such a magnitude that it will eventually affect everyone. Now, some are looking into Bitcoin as a potential savior of pension plans.Pension Funds Investing in BTC Could Achieve Annual Returns of over 19%
The deepening of the pension crisis is due to the difference between how much a pension has to pay out versus how much money the pension has available to pay out. Now, this gap is expanding. According to Moody’s Investor Services, public pensions are already underfunded by $4 trillion. And, Moody also announces that pension costs will rise through 2020.
So, the pressing question is, how to cover the $4 trillion gap?In the 2015 audit of state pensions, the avg yield was 3.6%. 6% of investments in "non-government securities." If 0.3% of all assets were invested in #Bitcoin, the pensions would have returned 19.20%. 5.3x the current rate – saving dying pensions.#Cryptocurrency #DeFi pic.twitter.com/POPGQIOTXK — Adam Cochran (@AdamScochran) August 8, 2019
Adam Cochran seems to have found the answer, at least, until population growth returns to the levels that existed when pensions were devised.
In his newsletter Coffee and Coin, he puts forward an argument for how Bitcoin might save pension funds.
Cochran’s article describes how in 2015 the U.S. state and local government pensions distributed their $3.8 trillion in assets, from which only a modest annual return of 3.6% was earned.
Moreover, Cochran specifically highlights Other nongovernmental securities. These are assets that do not adhere to an institutionalized process for public trading on exchanges. Thus, they are usually the riskiest assets held by the pension fund.
So, if pension funds seek to invest part of the money allocated to other nongovernmental securities in Bitcoin, the annual return would be dramaticall...