Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

[tastymannatees]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

Can anyone say, Ka-Boom? The illusion of financial solvency for these programs finally comes to an end. In the face of a rapidly aging population, these programs were dead before the ink even dried on the pension agreements. It is likely that Social Security and Medicare are in the same fix. At least I feel better knowing that we are in better shape than other advanced economies (including India and China) when it comes to the economic impact of an aging population.

So it looks like virtually every state, local, federal, corporate retirement program is basically kaput.

The dollar devalues and it get's worse, stocks fall some and it gets even worse, unemployment rises some more and it gets worse. Add in some big tax increases and it's going to be what you can pull out of a garbage can for a while.

Wetback in reverse. I'll need some flotation device to get me and my gold across the Rio Grande. Chile looks better and better all the time.

[Chris]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

From a total dollar liability standpoint, only 32.4% of the funds were 100% or better funded in 2007. That fell to 6.3% in 2008. That means that 92.7% of corporate pension funds are under-funded.

Apologies for my pedantry but shouldn't that be 100 - 6.3 = 93.7% of corporate pension funds are under-funded?

[jpatter666]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

Well they JUST Did EXACTLY that for social security.

They got the elephant's nose under the tent. No raise for a year (or two) isn't the same as canceling.

And for me, the relevant one would be the military pensions (which would directly relate to you, yes?)

[jiimbergin]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

hey, between the pensions and the medical coverage we're only talking about $0.5 trillion.

seriously, when i saw the $325billion shortfall for the pensions, my thought was "only $325billion?" i've become inured to these numbers.

It would have been much worse if over the last 20 years companies did not terminate their defined benefit plans in favor of defined contribution plans.

jim

[thriftyandboringinohio]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

this latest represents another two or three shovels full of public debt heaped on top of a mountain of it that started life as a private sector commitment.

I'd love to see a top-level analysis of this mountain - how much private debt is being transfered to the public, the biggest categories within it, and a time line for the trends of this shifting.

In my mind, it amounts to a looting of the US treasury - privatizing profits and socializing losses.

[dbarberic]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

I've been asking myself, why now, and why the push for massive health care legislation. Its almost like this administration is trying to slam it though. Nothing gets done in Washington without the push for lobbyists, so who benefits? After all, if there were still a ton of money to be made in private health care insurance, then the FIRE industry would never let it be privatized.

I think this report answers that.

Under funded medical pensions? Push the liability onto the government through a national healthcare plan.

[seanm123]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

The solution to the pension shortfall is the Life Clock.



When your Life Clock turn black you report for last day
where you become reborn in the Carousel




The irony here is that the movie Logan's Run was filmed in a shopping mall, the Dallas Market Center.

[thriftyandboringinohio]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

here's what i thought...

when benny boy bailed out the banks after they f&cked up and failed, the boyz still got their $3M ave. bonus... sanctity of contracts and all that.

but when airline pilots put their own $$$ into a co. pension plan for 30 yrs and the airline f&cks up and fails, the pilots get thrown under the bus... get 1/2 of their own f&ckig earned salary back! :eek::eek:

what happened to sanctity of contracts for them?

It's always amazed me that retirement plans are not treated seriously as contracts. One can work a lifetime, get pension plans in writing in detail, have money change hands, and then POOF! Corporation can change the plan from generous to stingy (or gone altogether), and just walk away laughing, and one is just out of luck.

[ThePythonicCow]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

6-12 months. The kicker I think is the lack of any ATTEMPT at this point to try to keep the curtain covering things up.

When the put-up jobs are so blatent that joe-6 pack can see through it, you know the jig is about to be up, soon.

But do we joe-6-packs see and revolt, or does the prospect of that scare the powers that be into cracking down harder or running another even more flagrant false flag operation to motivate more war?

[metalman]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

i can speak with some authority on this, though i did not work directly on the pension funds issue, i juggled other interrelated senior management issues for a fortune 500 and can tell you a few things:

1) the entire basis for my going there was to carry out a non-union international subsidiary growth plan to a level that dwarfed the historical union multi employer pension obligations and domestic cost structure problems.

2) these obligations were the elephant in every room, with stock prices in 04-07 wildly unreflective of the $4b underfunded pension liability staring the company's future in the face.

3) the strategy was begun far too late, and though it was a good concept, I have moved on and the company will make it, if at all, by a belated but diligent effort by senior management combined with a macro rebound (not likely) as well as the miracle of market share inertia.

4) the stock price has crashed, the PBGC refused to face its own reality as of the time i was there, competitors who bought out of the multi employer fund at huge cost during the bubble peak were ironically forced to support our efforts, but ultimately the stock price is now 5% of what it was, and the pensioners will likely receive $1200 per month from the PBGC instead of the $5500 per month they planned their lives on. If the PBGC finds a source for its ever growing obligations.

the only thing better than the articles on itulip are the comments from experts with first hand experience... who either corroborate or contradict the argument.

this gives me an idea. :cool:

how many public companies are out there with under funded pension obligations not priced into the stock yet? they'd make great short ops, no? as for timing, what causes shareholders to realize there's a problem?

when did shareholders of the company you worked for realize the problem and push the share price down 95%? thx!

[jk]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

1. pension accounting has always been bogus. during the last boom the way it worked was that companies used assumptions of 8-10% annual returns. [isn't that what you always make in the stock market?] and when the stock market went up, the pension fund holdings did too. they then took money OUT of "overfunded" pensions and added it to profits. and of course that meant a. higher stock prices to goose executives' options, b. bonuses for such high "profits."

2. corporate funded health insurance has long been a competitive disadvantage for american companies. iirc, gm used to have about $1500 of health insurance in the price of every car. national health insurance is a competitiveness issue!

3. defined benefit pension plans are disappearing fast. companies which have them are terminating them in large number, so that pensions going forward are all defined contribution. because the companies don't want the liability, and besides, people are such good investors.:rolleyes: too bad social security wasn't privatized like W wanted, then the banks and brokers could have been making more money and wouldn't have needed bailouts. and, again, people are such good investors!

[jtabeb]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

But do we joe-6-packs see and revolt, or does the prospect of that scare the powers that be into cracking down harder or running another even more flagrant false flag operation to motivate more war?

He who places his faith in the the proles is misguided. Saw that in a movie once, called 1984 I think.

Although I HOPE AND PRAY THAT a more civilized and thoughtful response is generated (Like persistent debt deflation as we go through a real reform process). I know that ain't gonna happen. But I believe in god, so I get to pray and that's what I do when everything else is so black that I can't see my hand in front of my face.

To Quote MC Hammer:

"That's why we prey, PREY, prey, PREY, we got to prey just to make it today"

And ain't that the truth.

[hayekvindicated]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

It's always amazed me that retirement plans are not treated seriously as contracts. One can work a lifetime, get pension plans in writing in detail, have money change hands, and then POOF! Corporation can change the plan from generous to stingy (or gone altogether), and just walk away laughing, and one is just out of luck.

Back in the day when I was a complete greenhorn at investing (as opposed to now when Im only a partial greenhorn) and started working in the City of London, I was advised by my "independent" financial advisor (all of us make mistakes, thankfully I got rid of that parasite in 2006), to invest in my employer's pension scheme (because of the "beneficial tax treatment"). Although I understood nothing of the market back then, my first reaction was "horeshit. If I can't touch my money until Im 55, it ain't worth nothin'." I bailed out and never invested a dime in the thing.

I have always been amazed at the level of trust people have in pension plans. There is no doubt that all working people need to prepare for retirement. However, I never trusted the finance industry for anything and found their formulas quite amusing - my independent financial advisor came up with all kinds of charts showing how much money I'd need. I thought to myself, "its about time I got rid of this monkey. Let him con others who believe him. Im out".

[cobben]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

"The solution to the pension shortfall is" :

Ättestupa

falling_off_cliff.gif

[snakela]

Re: Corporate Pension Fund shortfalls weigh on recovery - Eric Janszen

He who places his faith in the the proles is misguided. Saw that in a movie once, called 1984 I think.

Although I HOPE AND PRAY THAT a more civilized and thoughtful response is generated (Like persistent debt deflation as we go through a real reform process). I know that ain't gonna happen. But I believe in god, so I get to pray and that's what I do when everything else is so black that I can't see my hand in front of my face.

To Quote MC Hammer:

"That's why we prey, PREY, prey, PREY, we got to prey just to make it today"

And ain't that the truth.

Didnt hammer blow all his money and go bankrupt?

There's got to be a more apt song somewhere. Probably with lyrics that include "Oh boy we are so f*cked"