Tag: pension crisis

From Birch Gold Group

After the 2008 financial crisis, huge companies like AIG asked for billions in bailout cash, claiming they would close up shop if they didn’t get the funds.

The truth of the matter is that they had screwed up and wanted U.S. taxpayers to foot the bill. This situation left a bad taste in the mouths of most Americans.

Fast forward to today’s chaotic COVID-19 market, and it looks like history may be repeating itself. This time, the U.S. is on the verge of bailing out airlines. And soon to follow could be public pension funds.

An article in the Wall Street Journal shed light on the first U.S. state to request bailout funds:

Continue reading “No American Will Be Spared from Impending Public Pension Bailouts”

Guest Post by Simon Black

Late last year, the investment management giant Morningstar published a report concluding that most people can either save money for retirement, or save money for their kids’ education… but NOT both.

They make the economic realities very clear: parents have to choose between their own future, or their children’s future.

And one of the report’s lead authors went on to say that the RIGHT choice– the ONLY choice– is to choose your retirement over your kids:

“If you sacrifice your retirement savings to send your child to college, you’re making a huge mistake.”

That’s a pretty sad statement. But it’s unfortunately true for most people.

University education is already -very- expensive, and tuition fees are rising much faster than wages and income.

Continue reading “How screwed up the pension system is”

Guest Post by Martin Armstrong

Trump has called the Democrats the do-nothings. All they have been focused on is impeaching Trump for the polls they are looking at behind the curtain all show Trump will beat whoever they put up as their candidate. the motto has been – if you can’t beat him, impeach him. There is no other area where the Democrats have just failed to act with a major crisis looming in 2021 than the spreading of the Pension Crisis.

Continue reading “Pension Crisis – Congress is Unable to Act Because of Gridlock”

From Birch Gold Group

The pension system in the United States isn’t healthy by any stretch of the imagination. It has been underfunded for quite some time.

The newest pension system “report card” was released in June this year. It reveals the latest official data (as of 2017), and shows that things aren’t much better since the previous version we reported on back in January:

Continue reading “Failing U.S. Pension System May Need Federal Bailout to Survive”

Guest Post by Anthony Sanders

Green projects (like California’s bullet train from Victorville to Las Vegas, supposedly to protect the environment) and buzz words like “sustainability” are all the rage. So much so that Swedish high school student Greta Thunberg in traveling the globe like an environmental Stephen of Cloyes, and Nicholas of Cologne (Children’s Crusade of 1212), spreading the doom and gloom about global warming. In fact, San Francisco is painting a mural of Greta to raise awareness for her environmental crusade.

But where is the Greta Thunberg for government fiscal responsibility and pension reform? THAT is a real problem too!

Continue reading “Sustainability In Pensions: Where Is The Greta Thunberg For Fiscal Gov’t Responsibility?”

From Birch Gold Group

The bull market in stocks over the last decade hasn’t helped public pensions much. Officially, they acquired $8.8 trillion in liabilities, yet they remain 48% underfunded.

You can see the dramatically-widening gap between assets and liabilities on the graph below, which shows the latest available data from PEW:

Continue reading “Why This “Simple” Pension Crisis Solution May Not Help Retirees Much”

Guest Post by Simon Black

On Friday evening, the government here in Puerto Rico made an announcement to local retirees that many of them would have their pensions cut.

Poof. Just like that.

The pension cut is part of a debt restructuring plan to help Puerto Rico emerge from bankruptcy, which they declared in May 2017.

Bankruptcy is complicated, so I’ll explain a bit here.

Continue reading “The only fix is taking matters into your own hands”

From Birch Gold Group

Public and private pensions are in trouble. There needs to be a major overhaul to the way pensions are operated or they will likely go extinct.

Worldwide, pensions are piling up debt towards the $400 trillion level. Corporate pensions are suffering as well, with large companies considering whether or not to pull the plug on their programs.

Now it appears the alleged mismanagement of pension funds has resulted in legal action against pension programs.

Allegedly, Walgreens cost employees “$300 million in potential retirement savings” by breaching fiduciary responsibilities. According to Craine’s Chicago Business:

Continue reading “Pension Mismanagement Creates More Uncertainty for Retirees”

From Birch Gold Group

Whether or not you’re relying on a pension for part of your retirement, there is a grim future on the horizon for retirees tied to the pensions’ demise.

John Mauldin shines a light on the math that seems to explain why public pensions aren’t living up to their task:

So, when we say a plan is “fully funded,” it may not be so if the assumptions are wrong. Almost all public pension funds assume investment returns somewhere around 7% (and some as high as 8%+). That’s highly unlikely due to the debt we’ve accumulated, and debt is a drag on future growth.

Setting aside the fact that “assuming” anything isn’t a good idea, public pensions are basing their calculations on the assumption of a 7% return, but Bloomberg reports they aren’t even close to hitting the mark (emphasis ours):

Continue reading “Why Imminent Pension Crisis Reveals a Grim Future for All Retirees”

Guest post by John Mauldin

One difficulty in analyzing our economic future is the sheer number of potential crises. When so much could go wrong (and really right, when the exponential technologies I foresee get here), it’s hard to isolate, let alone navigate, the real dangers. We are tempted to ignore them all. Ignoring them is usually the right response, too. We can “Muddle Through” almost anything.

But muddling through isn’t the same as smooth sailing. It’s difficult, unpleasant, and often keeps you from looking for better opportunities. Then there are times when you can’t even muddle through. Instead, you find yourself emotionally at a dead stop or even going backwards. When surviving the storm is your focus, taking those “blood in the streets” buying opportunities is hard.

Which leads to this week’s letter. Almost every day I read scores of finance and economic newsletters, websites, articles, and books. A few articles on pensions hit my inbox this week and pursuing them led me to today’s topic.

But dear gods, I can remember writing a decade ago that public pension funds were $2 trillion underfunded and getting worse. More than one person told me that couldn’t be right. They were correct: It was actually much worse. (See, I’m an optimist!)

Continue reading “Your Pension May Be Monetized”

Guest Post by Martin Armstrong

At the current federal minimum wage of $7.25 per hour, working 40 hours per week, 52 weeks per year, yields an annual income of only $15,080. This is below the annual poverty line. It also reflects something that most people are unaware of — in Illinois, there are more than 19,000 retired teachers who get OVER $100,000 per year in their pension. According to the latest data, nearly 1.5 in ten federal employees are eligible to retire RIGHT NOW, and in five years the number will hit three in 10 or about 30%. The Housing and Urban Development Department in the federal government has the highest rate of employees eligible to retire right now of any major agency in government, which stands at a shocking 24%.

Continue reading “The Pension Crisis is Starting to Explode”

Guest Post by Simon Black

Last week, the head of a New York state pension fund found herself a new job.

Vicki Fuller, the former head of New York’s $209 billion fund, now earns $275,000 per year working part time for a natural gas group called The Williams Companies– good work if you can get it.

It’s noteworthy that when Ms. Fuller ran her state pension fund, she invested $110 million of taxpayer money to buy bonds issued by none other than The Williams Companies.

Bear in mind that Moody’s, the credit rating agency, downgraded Williams’ financial outlook to “negative” because of the company’s high leverage and risk.

The fund that Ms. Fuller managed also voted in favor of huge, multi-million dollar pay packages for senior executives of The Williams Companies even though the stock price was dropping.

Continue reading “With corruption like this, it’s no wonder so many pension funds are insolvent”

Guest Post by John Rubino

Money manager Rob Arnott and finance professor Lisa Meulbroek have run the numbers on underfunded pension plans and come up with an interesting – and highly concerning – new angle: That they impose a “stealth mortgage” on homeowners. Here’s how the Wall Street Journal reported it today:

Continue reading “Another Way Of Looking At The Pension Crisis, As “A Stealth Mortgage on Your House””

Guest Post by Simon Black

I’ve been talking a lot about the looming pension crisis…

My short thesis is, if you’re depending on a pension for your retirement, it’s time to start looking elsewhere.

Pensions are simply giant funds responsible for paying out retirement benefits to workers.

And today, the nation’s 1,400 corporate pension plans are facing a $553 billion shortfall. And, according to Boston College, about 25% will likely go broke in the next decade.

Continue reading “Two giant US pension funds admit there’s a BIG problem”