The Lord Abbett Review for Institutional Investors

The subprime and European sovereign debt crises reminded investors that poorly founded assumptions can have costly consequences. Now it seems that another critical assumption is roiling the financial world. Our cover story, "The 8% Dilemma,” explores the difficulties pension plans face with new, scaled-down expectations for assumed rates of return. With the domestic stock market essentially flat over the past decade, and with bond yields near record lows, the assumption by pension plans that they can consistently achieve 8% returns appears increasingly unrealistic.