State Pension Funds have $1 trillion shortfall

A new study says States have a $1 trillion pension gap:

States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn't taken.

The Pew Center on the States released a survey Thursday of state-administered pension plans, retiree health care and other post-employment benefits in all 50 states that blamed a decade's worth of policy decisions for leaving them shortchanged.

The result for some states will be "high annual costs that come with significant unfunded liabilities, lower bond ratings, less money available for services, higher taxes and the specter of worsening problems in the future," the study said.

Pensions as Political Calvin Ball - NY Attorney General Investigating

New York Attorney General Andrew Cuomo and the SEC are investigating Pension Placement Agents:

New York Attorney General Andrew Cuomo and the SEC say they’re investigating agents and money managers who used ties to public officials and kickbacks to buy and sell access to pension funds.

Placement agents call on institutions and wealthy individuals to sell investments on behalf of hedge, private- equity and venture-capital funds. Their targets go beyond public pensions, which held $2.23 trillion at the end of 2008, the U.S. Census Bureau said. They include corporate retirement plans, foundations, insurers and endowments. Such institutions held $27.1 trillion in assets at the end of 2006, according to the New York-based Conference Board’s latest annual tally.

Pension Bombs Going Off

This article speaks for itself. Yet another Bush regulatory body allowed to run roughshod over rank and file employees.

Exploding pension fund shortfalls are blowing billion-dollar holes in the balance sheets of some of the Chicago area's biggest companies, forcing them to make huge contributions to retirement plans at a time when cash flow and credit are already under stress.

  • Boeing Co.'s shareholder equity is now $1.2 billion in the hole thanks to an $8.4-billion gap between its pension assets and the projected cost of its obligations for 2008. At the end of 2007, Boeing had a $4.7-billion pension surplus.

  • Hoffman Estates-based Sears, which announced the closings of 24 stores this year, expects its pension expense to soar as high as $175 million this year from $1 million last year due to the markets' decline.

Argentina To Nationalize Private Pensions

What this means is anyone's guess. Argentina Proposes Nationalization of Pension Fund:

Argentina's leftist President Cristina Kirchner proposed nationalizing the country's private pension funds in what could be seen as a grab for cash and power amid the global economic crisis.

The proposal, which triggered a steep drop on Argentina's stock market after it was leaked by union officials and reported in the Argentine press, reinforces Argentina's image as a pariah in financial circles and represents a repudiation of a system of private pensions that had been in vogue in developing countries. In 2001, Argentina announced the largest sovereign debt default in history.

Brokers work at the Buenos Aires Stock Exchange, in Buenos Aires. Argentine stocks fell by more than 11% in reaction to news that the government plans to nationalize private pension funds.

Here Comes De Hedge Funds

The CNBC screen flashed with massive losses of hedge funds. 18% down, 14% down, 20% down.....

It appears Dr. Doom is batting 1000 for he just predicted the hedge funds would be next to collapse.

While they are blaming a ban on short selling, one foreboding issue pops up:

Some pension funds and endowments that have relied on hedge funds for a stable, higher-than-average source of investment returns have been watching the unfolding trouble with alarm

The Independent has the scoop:

Redemptions means people are saying give me my money, I want out!

Wall Street Wants your Pension

Woah, new article from Business Week is pointing to regulators allowing:

The folks who brought you the mortgage mess and the ensuing hedge fund blowups, busted buyouts, and credit market gridlock have another bold idea: buying up and running troubled corporate pension plans. And despite the subprime fiasco, some regulators may soon embrace Wall Street's latest scheme.

In preparation for that moment, the world's biggest big investment banks, insurers, hedge funds, and private equity shops have been quietly laying the groundwork for such deals over the past year. They would be a big prize for Wall Street. The $2.3 trillion pension honey pot has $500 billion in "frozen plans" that are closed to new employees and whose benefits are capped

Nice catch from Business Week!