Gyroscopic Investing

A friend of mine recently told me that she has a New York State fixed, guaranteed return of 7% on her retirement funds, which I found difficult to believe.  She is a teacher. I looked it up here:

https://www.trsnyc.org/trsweb/news/inve ... turns.html

and that seems to be correct. How is it possible to offer that kind of a fixed, stable return when you are lucky to get 2% in a 5 year bank CD? Am I missing something?

The NY state government could offer 25%, right? I mean, it's just a straight-up transfer of money from taxpayers to pensioners. The return they pay is limited only by the willingness of taxpayers and bondholders to put up with it.