Posted on 11/20/2008 12:29:36 PM PST by SmithL
Forbes.com has a lengthy piece that tries to devine whether another catastrophe will deliver a final blow to the economy before recovery starts. CalPERS is mentioned in the piece.
John Osbon, one of the experts on Forbes' "Investor Team," says, "I can imagine CalPERS or TIAA-CREF making some announcement that they are cutting benefits and payouts by 30% due to investment losses, non-functioning markets and so on. That would be a real hit with real money."
This strikes us as a bit ignorant, since CalPERS pension benefits are guaranteed. The fund can't simply "announce" a cut . . .
(Excerpt) Read more at sacbee.com ...
By whom?
This debacle has more shoes dropping than Imelda Marcos!
That’s another problem for Cal-ee-fornia.
And why is this going to happen?
Because they thought that buying commodities indexes was “investing.”
When commodities returned to trendlines (as they always do), the fraud of “investing in commodities” was exposed and these guys, along with a lot of other people who confounded investing and speculation were taught a lesson.
It doesn’t make sense to me that TIAA-CREF would go under. They’re fairly conservative.
Good question, something the article writer should ask himself. Then again, I doubt he's read "Atlas Shrugged".
The guarantee on CalPers is only as good as the State of California's credit rating.
An interesting insight.
That’s what I was thinking....there are only two things in life that are guaranteed:
death and taxes.
True, and Obama is going to tax us to death.
Yes. They are one of the most stable, conservative firms out there.
Maybe the author doesn’t understand the diffrence.
I assume the CalIPERS (sp?) is a pension.
TIAA-CREF is not.
CalPERS Loses 35 Percent of its Portfolio Value
The decrepit legislators will figure out a way to ‘save’ calpers and use the money to bailout the shortfalls.
The possibilities are three:
1). The Pension Benefit Guarantee Board (PBGC), a qusai-federal agency, which limits it's guarantee to ~60K per year;
2.) The State of California, or some state agency, which could either legislate itself a solution or file a Chapter 9; or
3.) A private insurance fund, which could file either Chapter 11 or Chapter 7.
ping
Taxpayers in California guarantee CalPERS.
The government said so. Thus, the guarantee is Holy Scripture. ;)
CalPERS is the California Public Employee Retirement System. Participants are (were?) guaranteed a certain rate of return. IT is a large fund, essentially, that owns stocks, bonds, and other assetts.
The pensions of California government employees are run out of it.
Say you contribute 10% of your salary for 20 years, your agency matches it, both are guaranteed to grow at 8% a year.
Years when it goes up 10% the fund keeps the extra.
Years when it underperforms the taxpayers make it up.
When you hit retirement age (age 50 for some gvt.employees!! LOL!) your total converts into an annuity.
I believe the guaranteed return part may have been ended a few years ago, or ended for new employees, not sure.
Anyway, all moneys are in a giant fund. Now the fund is broke. But because of how the contracts were written all those years the State must pay them if the fund cannot.
Ooops!
Should be fun to watch. It was a model for other states. Oregon copied it and it almost bankrupted them in the mid 1990s.
Oregon PERS has lost 20% as of OCT 1. No telling how bad their hole is now.
Please explain the distinction.
Yikes!
Don't tell CalSTRS. They just announced a 5% increase in benefits to their union members.
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