Pensions

Puerto Rico budget ignores the human element

27 Apr 2018

The bankrupt island’s federal oversight board certified plans that include cuts to pensions and other austerity measures. Some are in line with what Puerto Rico’s governor proposed. But they don’t adequately address the risk of yet more working-age people jumping ship.

Capita swerve averts Carillion-style crash

23 Apr 2018

The outsourcer is raising 700 mln pounds from shareholders. Halving its debt-to-EBITDA ratio helps new CEO Jonathan Lewis avoid the downward spiral that felled the UK contractor. The bigger task is showing that a stronger balance sheet can reverse sliding revenue and cash flow.

Texas downgrade worry is a good problem to have

12 Apr 2018

The Lone Star State’s comptroller reckons its increasingly underfunded pension obligations risk a credit markdown. Texas’ rainy-day fund helps give it more leeway than many states. Others face bigger problems because, as the U.S. economy has improved, their budgets haven’t.

U.S. pensions struggle to hold line on governance

13 Mar 2018

A bull market is boosting American retirement funds but not corporate standards. Trustees worry the Trump administration may curb their influence over boards while global competition fuels a race to the bottom on voting rights. They may have to run hard just to hold still.

MetLife pension gaffe leaves CEO on thin ice

30 Jan 2018

Steve Kandarian’s big coup was getting the $725 bln insurer knocked off the list of systemic institutions. But MetLife’s failure to pay benefits to 30,000 retirees overshadows that achievement. After poor returns and a disappointing spinoff, it looks like his time is up.

UK pension watchdog needs new tools, and backbone

24 Jan 2018

Prime minister Theresa May vowed to punish groups that fail to protect retirement benefits, like collapsed outsourcer Carillion. New tools could include fining companies or curbing payouts. But the regulator can do more with the powers it already has to make companies fill gaps.

Chancellor: Carillion’s flaws are common to many

22 Jan 2018

The collapsed UK construction firm’s problems may look idiosyncratic. But its problems with “onerous contracts” were exacerbated by a balance sheet stuffed with intangible assets and ultimately shaky assumptions. These issues are not peculiar to Carillion.

Carillion collapse exposes new bank folly

22 Jan 2018

The failed UK contractor used lenders to finance 412 mln pounds of payments to suppliers when cash was running low. The process, known as “reverse factoring”, seems a lucrative way for banks to provide short-term credit. But insolvency exposes the true extent of the risks.

Italy’s pension U-turn would try markets’ patience

10 Jan 2018

Centre-right parties, frontrunners in March elections, have vowed to scrap a key pension reform passed during the 2011 crisis. The law is rigid, but axing it would hurt young Italians and widen Rome’s fiscal deficit. Investors would have a reason to avoid Italian debt.

Tech backlash catches up to Apple

8 Jan 2018

Jana Partners and pension giant CalSTRS want the company to give parents better controls over their kids’ iPhones. It’s an unusual issue for an activist, and apps from Facebook and Snap would make better targets. But focusing on Apple shows how much technology has lost its halo.

Canada will export its pension model to U.S.

4 Jan 2018

Canada’s retirement funds are well funded and governed, run most of their money in-house, shun rosy assumptions and post good returns. As the need to lift returns increases, expect struggling U.S. public pensions to adopt at least some of their northern neighbors’ approach.

Short-selling fee bastion will be hard to topple

18 Aug 2017

Wall Street makes $9 bln helping pension funds lend stocks to fuel hedge-fund bets. Now three public retirement plans are accusing Goldman, JPMorgan and others of collusion. It’s a business ripe for disintermediation. But it’s too lucrative for banks to concede without a fight.

Lloyds has a good get-rich plan

15 Aug 2017

The lender is considering a push into wealth and savings products. A capital idea. Lloyds’ 2,000-strong branch network gives it a head start over rivals. And while CEO Antonio Horta Osorio has done a good job at cutting costs, it’s high time he did more to grow revenues.

U.S. tax-cut hopes may give pensions a rare boost

2 Aug 2017

International Paper is borrowing to stoke its retirement fund. Rising plan costs and a desire to lock in tax benefits before any reduction in rates prompted the move. With other firms likely to follow, this is one way Trump’s fiscal policies can trickle down to the little guy.

Match.com owner leaves investors looking for love

26 Jun 2017

A CalPERS lawsuit has forced IAC to scrap plans to use non-voting stock to give Chairman Barry Diller eternal control of the company. Legal threats may thwart similar egregious ideas. But to remove existing supervoting powers at Facebook, Snap and the like is a far harder task.

Chicago emigration is warning of Detroit endgame

1 Jun 2017

More people quit the Windy City in 2016 than left any other U.S. metropolis. Chicago's pension funds and schools are already strapped for cash. A sustained exodus can only worsen the financial squeeze. If it's not reversed, the long-term risk is Motown's bankruptcy and blight.

Theresa May has a way out of UK pension pickle

28 Apr 2017

The prime minister is dithering over whether to keep guaranteeing above-inflation hikes to pensioners. The triple-lock is nonsensical, inequitable and unfit for an era of Brexit and stagnant wages. May has the political capital to adopt a fairer single-lock, tied to earnings.

Brazil’s Temer steers white-knuckle reform route

17 Apr 2017

The "Car Wash" corruption probe is increasingly denting the president's government as he tries to drive crucial changes to an unsustainable pension system through Congress. The nation's economic recovery may hinge on his ability to ease off the gas just enough to ensure passage.

Philip Green pays 363 mln pounds for a quiet life

28 Feb 2017

That’s what the British apparel billionaire has put into the pension pot of defunct retailer BHS. It ought to calm politicians who painted Green an enemy of the state. And, anyway, the return from reinvesting his jumbo dividends should cover it nearly twice over.

Panasonic joins ranks of Japan’s buyout bullies

24 Jan 2017

The electronics group has offered to buy out the remaining 45.5 pct of subsidiary PanaHome for about $515 mln. The stingy deal ignores the target's big cash pile. For all that corporate Japan has reformed, minority investors remain vulnerable to bullying like this.