Pensions

Dallas pension fiasco lights up broader problems

28 Nov 2016

Investment losses and a bank-like run prompted the police and fire workers fund to ask the city for a $1.1 bln bailout. Some of its woes are unique, but it was chasing unrealistic returns in a low-rate world. That's a problem for the entire $4 trln U.S. public pension system.

U.S. pension funding boost is temporary reprieve

24 Aug 2016

New figures show a $1.1 trln funding gap for 50 states narrowed in 2014 as high returns boosted assets. Investments have struggled since, though, and assumptions about long-term returns are still too rosy. Even the better-funded pension pots may fall short as bills come due.

Goldman’s BHS faux pas is cost of doing business

30 Jun 2016

The investment bank admitted its reputation was not enhanced advising retail magnate Philip Green on the sale of the now-bust UK retailer. Indeed it wasn’t. But courting the rich and colourful is just another kind of trade. Sometimes it brings revenue, sometimes it brings costs.

Bond jitters shouldn’t delay Japan pension reform

4 Jun 2013

Asking state funds to buy fewer government bonds when the central bank is struggling to control yields may look an own goal. But juicier returns should reduce the taxpayer’s exposure to future shortfalls. Besides more money moving out of Japan will help keep the yen weak.

Kodak shows rusty side of "gold-plated" pensions

30 Apr 2013

The bust U.S. firm synonymous with camera film is selling a bunch of assets to its UK pension fund. The deal should avoid a regulator-led bailout. It also shows how defined-benefit pensions can betray their gilt-edged reputation. Such schemes are only as good as their backers.

U.S. companies need to get real about pensions too

23 Jan 2013

As lawmakers wrestle over how to fix the nation’s ailing retirement benefit programs, AT&T and Verizon took a whopping $17.2 bln of charges for theirs. Return expectations remain too rosy and deficits are rising. The private sector isn’t exactly leading the way on the issue.

Calpers’ 1 pct return is grim for pension savers

17 Jul 2012

One miserable year won’t ruin the $233 bln California fund. And 20-year returns for Calpers and fellow Calstrs still meet 7.5 pct targets. But with today’s low interest rates it gets harder for funds to keep up. Future retirees everywhere need to put more away.

BT gets better side of deal with its pension fund

23 Mar 2012

The UK telco’s stock rose 6 pct after it said its pension deficit had more than halved to 4 bln stg and unveiled a plan to shrink the liability further by 2021. The market reaction is understandable. The pension scheme’s trustees could have demanded a faster fix to the problem.

UK’s post deal should have pension bosses drooling

22 Mar 2012

Britain is to assume responsibility for Royal Mail pensions. Ministers get to offset 28 bln pounds of assets against the UK’s debt and - for now - ignore liabilities that are 10 bln pounds larger. If other pension managers could follow, they’d be queuing all along Downing Street.

Calpers gets real, sort of, on pension returns

14 Mar 2012

The $233 bln California pension fund finally cut its long-term return assumption by 0.25 percentage point to 7.5 pct - the first move in 10 years. The figure should probably be lower still, but even that tweak opens a $303 mln annual gap that the Golden State has to plug.

Leverage too risky for U.S. public pension funds

23 Nov 2011

Many still reckon on making an 8 pct annual return. That’s now unrealistic for a fairly safe portfolio, as a new Breakingviews calculator shows. Fund managers need to bring expectations down to earth. But instead, some like the dangerous idea of borrowing to juice returns.

Auto workers adapt to life as Motown shareholders

28 Sep 2011

The new UAW contract with GM eschews the overly generous benefits of the past for more measured terms. Deals with Chrysler and Ford may be tougher. But Detroit’s near-death experience and the UAW’s stakes in two of the big three have taught the union the benefits of restraint.

Russia needs to kick-start pension reform

15 Aug 2011

A rapidly rising state pension bill will become a crippling burden without serious reforms. The latter is the key not only to addressing deteriorating public finances, but also to developing flimsy capital markets. A pity Russia’s leaders are so shy about the sensitive issue.