Many municipal funds are already "hedged" through derivatives. (2011 article) http://www.chicagobusiness.com/artic...th-investments
The Illinois Teachers' Retirement System — the worst-funded major pension plan in the U.S. — is pumping more of its assets into higher-risk investments while using accounting methods that some pension experts say understate its funding shortfall.
Springfield-based TRS, the state's largest pension provider, plans to allocate about a third of its $37.8-billion portfolio to alternative investments such as private-equity and hedge funds, a four-month Crain's investigation of TRS holdings and practices finds. These unconventional assets typically dangle the potential for higher returns, but only because they also carry greater risks and fees. TRS is shifting its portfolio while it's still developing an in-house risk-management system.
With much attention to Illinois pension funds, it may be well to note that all "municipal" funds are not equal. While some municipalities may share in certain funds, others will be separate and apart.
I think the likelyhood of sudden defunding is not in the cards. With very few exceptions, most funds have capital that will be spent down before any massive defunding... even though the end result will be the same.
Mandatory "legal" funding?... Hmmm... which stone has the blood?
Plan B was to have at least one member of family with SS.