Posted on 04/20/2016 7:28:06 PM PDT by Nachum
A dark storm is brewing in the world of private pensions, and all hell could break loose when it finally hits.
As the Washington Post reports, the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, has filed an application to cut participant benefits, which would be effective July 1 2016, as it "projects" it will become officially insolvent by 2025. In 2015, the fund returned -0.81%, underperforming the 0.37% return of its benchmark.
Over a quarter of a million people depend on their pension being handled by the CSPF; for most it is their only source of fixed income.
Pension funds applying to lower promised benefits is a new development, albeit not unexpected (we warned of this mounting issue numerous times in the past). For many years there existed federal protections which shielded pensions from being cut, but that all changed in December 2014, when folded neatly into a $1.1 trillion government spending bill, was a proposal to allow multi employer pension plans to cut pension benefits so long as they are projected to run out of money in the next 10 to 20 years. Between rising benefit payouts as participants become eligible, the global financial crisis, and the current interest rate environment, it was certainly just a matter of time before these steps were taken to allow pension plans to cut benefits to stave off insolvency.
The Central States Pension Fund is currently paying out $3.46 in pension benefits for every $1 it receives from employers, which has resulted in the fund paying out $2 billion more in benefits
(Excerpt) Read more at zerohedge.com ...
The list, Ping
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Liberals either can’t do math or don’t want to.
Is Jimmy Hoffa still looting it?
Hell Hath No Fury...Like a Teamster Scorned!
Yikes! If so, this is going to get ugly...and FAST!
Meanwhile we continue to give Iran, and other Middle Eastern states (except Israel) all that money that could go towards these pensions. Disgusting government.
They invest based on political correctness, not profit.
i suppose stop giving away millions to RAT politicians is out of the question... screw-em
Gee....I wunder how much that pension fund has given to Democratic politicians?
Liberals either can’t do math or don’t want to.
Surely there are a few magic bank accounts around that they can plug into.
Or profit for the union bosses, not the employees.
Oh wow.
I have a picture in my mind of the peak of a very tall mountain and seeing a few pebbles shift and start rolling down the slope, they roll into some slightly bigger stones and they too start rolling down the slope then they hit some even bigger stones and...
One of the big contributors to this is the federal reserve’s low interest rate policy. Interest rates are two sided coins, when one side wins, the other loses. When interest rates are kept low as they are now, borrowers win, but lenders lose. Lenders include not just banks, but pension funds, who seek fixed income investments over the long term.
Time to call Jimmy Hoffa.
This won’t be the only one.
Just as Fed and government policies have made it impossible for small savers to earn a sensible rate of interest on savings, big investors like pension funds also no longer have the safe, CD and money instrument type investment that could earn 5% or so on some of their more conservative investments.
Everyone is contributing to the ongoing financial bailout.
The government punishes all prudent behavior.
I remember dealing with this in some detail back in 1976 when ERISA became law and our company had a covered plan. The government was going to take care of everyone in these defined benefit plans and in the extremely unlikely possibility that a plan was still bankrupt each employer with a plan had paid a premium to ensure there was a stash of money around to take care of any problems.
Well no one started defined benefit pensions any longer because of government regulation and instead opted for 401K plans. Now it does not look like any of those fine regulations were effective and Congress in 2014 finally realized there was no money available to cover their promises.
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