Don’t look now, but many of the nation’s states are in deep financial trouble. Pensions around the country have been underfunded, and Ohio is one of the worst offenders. By 2037, there’s only a 25% chance Ohio’s fire fighters and police officers will have their pensions fulfilled by the current system. Economists Erick Elder and […]
Search Results for: pension
Bond and Pension Struggle in Puerto Rico
You get an idea how the struggle between bondholders and pensions quickly turns into a political nightmare, as reported in the WSJ: San Juan, Puerto Rico—One of the thorniest tasks awaiting a seven-member board charged by Washington with cleaning up Puerto Rico’s debt crisis is deciding how to balance a $70 billion debt load with […]
Pension Survival Increases Risks
“The public dispute over accounting standards is a signal to taxpayers, retirees and political reformers that fundamental flaws remain in how pensions measure their finances,” writes Steve Malanga in the WSJ. At issue, as he correctly points out, is the delusion that government pensions “on average estimate they will earn 7.6% a year on their portfolios.” Using […]
Dangerous Rules Make American Pensions Riskier
The abuse of expected returns assumptions at public pension funds in America is something I have regularly raised a red flag about. Take a look here at The Economist’s comparison of American public pension fund rules with those for private funds and foreign public funds. The opportunity to use inflated future return expectations leads public pensions […]
States and Cities Struggle under Pension Weight
Timothy Martin writes at the Wall Street Journal that public pensions in the United States are about to record their lowest long-term returns ever. I’ve warned about the threat to pension funds posed by low interest rates time, and time, and time, and time again. Now the chickens are coming home to roost, and public […]
Brexit a Pension Fund Risk?
I’ve written in the past about the threat that low market yields and returns pose to pension funds, where managers are setting expectations too high (see here). Now managers face a new threat, the fallout from the Brexit. The Wall Street Journal reports: The retirement savings of tens of millions of people have come under […]
Hedge Funds, Pensions and their Union Handler
Hedge Fund managers are under pressure from Randi Weingarten, president of the American Federation of Teachers (AFT), for supporting charters schools and pension reform. Some pension funds have withdrawn money from hedge-fund managers criticized by the teachers union. And some hedge-fund managers stopped making donations to advocacy groups targeted by Ms. Weingarten. Hedge funds, reluctant […]
Pensions: Left on the Hook will be the Taxpayer
Ike Brannon, a visiting fellow at the Cato Institute, explains how the Puerto Rico rescue makes state pensioners the big winner. Right now, states cannot declare bankruptcy, which is one reason why states have traditionally been able to borrow at such low rates of interest. However, financial markets have come to realize, belatedly, that Illinois […]
Warning! Pension Funds Continue to Swing for the Fences
You really can’t make this stuff up. Pension funds refuse to read the writing on the wall: We are living in a reduced return world. It’s as simple as that. Yet instead of taking their lumps, and I’m not even talking about funding what they should have paid years ago into the plan, they are […]
Pensions in a Load of Trouble, Part II
The state of Rhode Island has been a big-time investor, through its pensions, in hedge funds. Retired teachers who depend on this money for retirement should not be invested in hedge funds. It’s as simple as that. Unfortunately in the world of public pensions big committees and chest thumping rule the day. Egos and resume […]
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