Government Admits It Can't Fully Guarantee 51% Of Insolvent Pension Plans

A new report suggests that the government agency in charge of backstopping private-sector pension plans (the Pension Benefit Guaranty Corporation) isn’t entirely optimistic about its own ability to provide an effective safety net for multiemployer plans. In fact, more than half of participants will see their benefits cut if their plans become insolvent and are forced to turn to government guarantees.

So ATS, What's a pensioner or future pensioner supposed to do.
It now looks like the Government Agency that backstops this money supposedly put away for people in their retirement is beginning to look a tad bit shaky, what with the low returns we've had on investment since this crisis began in 2008.

Now what are most of us going to do if the money just isn't there when it comes time for us to start enjoying our Golden Years? Do we go back to work as some sort of Burger Flipper/Greeter/Security Guard? I don't know about you guys but I'd be a might bit perturbed if I'm told that your &&& just ain't there when it comes time for me to start drawing on the monies I've paid in for decades!So what do Y'All think? Should we let the looters be able to default on their obligations to The American People Scott Free? Or, should we hold The Corporates/Banksters and Politicos accountable to pay us what we've earned?

Anything Y'All would like to add, Yell About or just Generally Grumble is as always most welcome and we do answer anything that seems relevant to this particular subject. Thanks for looking and Peace to All You ATS Folks out there Arjunanda.

(ARTICLE)
Earlier this month we outlined why it is a bad time to be a pensioner. Among the issues we identified were the 18% increase in EU corporate pension deficits occasioned by the use of a lower discount rate in the calculation of the present value of liabilities (thank you Mario Draghi), US public sector pension plans’ shift away from fixed income and towards more risky investments due to an express unwillingness to adopt more realistic investment rate assumptions (because that would mean lowering the liability discount rate), and a rumor (which just today was confirmed as fact) that Greece will indeed look to their plunder pensions in order to stay afloat.

In the most recent example of why pensioners in the US should perhaps be a bit concerned about the security of their benefits, a new report suggests that the government agency in charge of backstopping private-sector pension plans (the Pension Benefit Guaranty Corporation) isn’t entirely optimistic about its own ability to provide an effective safety net for multiemployer plans.

Via Pensions and Investments:

More than half of multiemployer plan participants will have their benefits reduced if their plans become insolvent and rely on government guarantees in the near future, said a study released Wednesday by the Pension Benefit Guaranty Corp.

That compares to 21% of participants now in plans that have already run out of money and rely on PBGC guarantees.
As the following chart shows, the agency is doing a fairly decent job when it comes to participants in plans that are currently insolvent and receiving assistance, but when it comes to backing up plans that are “likely to need assistance in the future,” the outlook is not good, with more than half of participants suffering a reduction in benefits...

Earlier this month we outlined why it is a bad time to be a pensioner. Among the issues we identified were the 18% increase in EU corporate pension deficits occasioned by the use of a lower discount rate in the calculation of the present value of liabilities (thank you Mario Draghi), US public sector pension plans’ shift away from fixed income and towards more risky investments due to an express unwillingness to adopt more realistic investment rate assumptions (because that would mean lowering the liability discount rate), and a rumor (which just today was confirmed as fact) that Greece will indeed look to their plunder pensions in order to stay afloat.

In the most recent example of why pensioners in the US should perhaps be a bit concerned about the security of their benefits, a new report suggests that the government agency in charge of backstopping private-sector pension plans (the Pension Benefit Guaranty Corporation) isn’t entirely optimistic about its own ability to provide an effective safety net for multiemployer plans.

Via Pensions and Investments:

More than half of multiemployer plan participants will have their benefits reduced if their plans become insolvent and rely on government guarantees in the near future, said a study released Wednesday by the Pension Benefit Guaranty Corp.

That compares to 21% of participants now in plans that have already run out of money and rely on PBGC guarantees.
As the following chart shows, the agency is doing a fairly decent job when it comes to participants in plans that are currently insolvent and receiving assistance, but when it comes to backing up plans that are “likely to need assistance in the future,” the outlook is not good, with more than half of participants suffering a reduction in benefits...

www.zerohedge.com..." target="_blank" class="postlink">www.zerohedge.com... s/2015-03-12/government-admits-it-cant-fully-guarantee-51-insolvent-pension-plans

a reply to: arjunanda



Oh... DON'T Worry!

The Government already has a plan to confiscate all the pensions and 401k's and give you Social Security 2.. LOL

See they get about 20 to 24'sih Trillion now (when they do it) and you get a promise

Then going forward, you get to contribute a % montly to the My IRA like scam which finances US Debt purchases going forward. Instead of having to worry about investing your money, they will buy bonds with it!

money.usnews.com...

Oh Boy Infolurker, So can I take these politicians promises to the bank and cash them? They sound as good as gold to me (sarc). Good reply ands a Star Arjunanda. a reply to: infolurker

Clearly, this has been a case of the Fox watching the Hen House.

'The People' have no investigative power. Elected officials from both parties focus themselves on short-term goals which produce good sound bites for the MSM. With no honest oversight, I hope questions like, "What was the ultimate purpose of long-term Quantitative Easing?"

We can prop up the markets, but we can't cover the plans meant for retirement.

I guess old people can't run fast enough to worry about them carrying pitchforks and torches. Probably some oversight there too, because most of the old fogies I know belong to AARP ... Armed And Really Perturbed.

You're right Snarl, and they vote in greater numbers than any other demographic! A Good Reply and A Star Arjunanda. a reply to: Snarl

a reply to: arjunanda


They will do it, not sure when.

They will of course make it a partisan issue but that is more of a "feigned resistance" since the establishment of both parties will have no problem financing the current system for a few more years by taking the retirement funds and spending them.

Most of us under 50 have already come to the conclusion that our 401k's will not be there when it is time to cash them in. Most of us don't expect Social Security since they plan on increasing the retirement age and any other tricks to keep you from collecting on your years of investing into it.

The Government will take care of it's own. If you are working in the private sector, you are the host for the leaches and they plan to suck you dry until your dead.

a reply to: Snarl

I have a horrible suspicion that QE will be the death of everyone's savings and importantly pensions if the current banking system is to be propped up to feed to elite.

There is something so illogical about just printing money with nothing to back up the paper its made of, yet being expected to pay huge interest on this worthless paper to the central banks for the privilege. Perhaps without those leaches removed and a write-off of some of the world debt, we night get some parity from the exchequers in our government departments with what we are actually worth and a fairer financial system for everyone as QE seems to be infesting the world and putting everyone as they get older's income at risk - although the Greeks may say its not only the older ones that have beenare being fleeced.

a reply to: arjunanda

While I agree that this isn't good news, the primary fault for any failing pension plan is bad management on the part of the trustees who were tasked with overseeing the plan.

I know this because I served for over 10 yrs., (1994 thru 2005) as a labor trustee of a multi-employer benefit trust fund, (actually 4 of them) with assets in excess of 500 million dollars.

Just like your source article said, most failures can be attributed to funds that refuse to accept reasonable benchmarks for their returns on investments which led them to be more aggressive and to take more risk.

During my tenure as a trustee, I was quite surprised when I went to national conferences for employee benefit plans to find out that many trust funds had benchmarks twice what ours was. Ours was 6%, but a lot of trustees I talked to from other plans stated they had benchmarks anywhere from 12% to 15% which IMO, was insane.

They would then award raises to their pensioners, (something that cannot be reversed under ERISA) based on their assumption that their investments would produce returns at least as good as their benchmark, indefinitely.

The benchmark is supposed to be your bottom line expected returns on which you can have actuarial assessments made to assess the plans ability to fund it's current
liabilities and/or future benefit enhancements.

Needless to say, 12% and 15% returns went out the window in 2008 and now those plans that were relying on huge returns couldn't meet their obligations.

The PBGC is basically a govt. funded insurance policy for employee benefit plans that abide by ERISA regulations. They were not the people who mismanaged the pension funds, that was the plan trustees.

On the other hand, it's apparent that they were they ones who failed to successfully regulate and/or oversee the trust fund managers so as to insure that these funds remain solvent.

There are a lot of regulations to follow under ERISA guidelines, like not being able to co-mingle funds etc.. ( borrowing from one fund to support another). Why the hell they didn't have a regulation limiting excessive benchmark expectations, I'll never know and always wonder.

I too, hate to see anyone's pension get cut but I still place most of the blame on the trustees who mismanaged their funds.

Thankfully, the pension fund that I served on is healthy and solvent to this day and I receive my check right on time every month.

Anyway, that's my two cents worth. Hope it wasn't more than you bargained for.

Great Reply Flatfish!
I love the Info you gave all of us as to the overly optimistic expectations of the funds trustees and lack of oversight by the regulators. This all makes sense having seen similar outcomes with Large Banks needing bailouts due to their intermingling depositors funds with the banks own trading funds and losing big on occasion (A Lot in 2008/9) and the consequences of this behavior, which we are still feeling the results of. I would give you Five Stars if I could and Thank You Again for your reply Arjunanda. a reply to: Flatfish

I'm sure they will do it Infolurker, They're probably salivating right now thinking how they can get their hands on our pension money and party it away with their friends, families and supporters. They care not if we end up on the streets , Sociopaths all of them. Good Reply and Peace Arjunanda. a reply to: infolurker

a reply to: arjunanda

Americans will end up fighting a civil war

You folks will fight a civil war now, or later

And since I don't see you fighting it now, I guess you collectively opted to fight it later

Ok, fine with me, it will just hurt more

a reply to: arjunanda

It is much worse than people think.

$205 Trillion in Unfunded Liabilities

This can never be paid, this will never be paid.

I think we should repudiate that debt, go bankrupt and get started rebuilding our lives rather than justifying, excusing and expanding our bureaucracy.

The longer we wait, the worse the correction will be.

Did anyone actually think they would see that money again?

My parents probably won't see theirs- and I know damn well I won't see mine. Gub'ment puts a gun to my head- I put 4k into "SSC" last year against my own will- knowing full well I'll never get it back.

That 4k could have done a lot more good in my pocket, going towards an actual retirement plan- a piece of land to call home, or a tractor to work it.


We're all working until we die- one way or the other.

a reply to: arjunanda

Perhaps this is the reason why Obama was pushing for to nationalize the nation’s pension system and to eliminate private retirement accounts including IRA’s and 401k plans.

Is been hearings and discussions that have to do with why Most working Americans are no saving for retirement, this is a new soon to become market for mandatory retirement accounts to become a mandate just like ACA.

Something is cooking and people are no paying attention.

originally posted by: marg6043
a reply to: arjunanda

Perhaps this is the reason why Obama was pushing for to nationalize the nation’s pension system and to eliminate private retirement accounts including IRA’s and 401k's.

I must have missed that one. Do you have any sources to support this assertion or is this just an opinion?

Right On Marge!
There's been discussions in Congress about Nationalizing The American People's 401K's and IRA's and putting them into US Government Guaranteed Pension Bonds (IOW Treasury Bonds) and we're supposed to believe it's different this time? That this current crop of politicians won't steal it all this time like has been done over and over again. I'm sure they have plenty of good ideas of all the wonderful things they can do with our pension money earned over the decades, just freaking unbelievable! Good Reply and A Star Arjunanda. a reply to: marg6043

We're slaves.
Someday soon we're going to have an epiphany.

Hey Flatfish, This has been written about by many sources for a while now!
Will Our Private Savings Be Sacrificed To Pay Down The Public Debt?
www.zerohedge.com...

(Article)
Submitted by Adam Taggart via Peak Prosperity,

Recently, an article by Daniel Amerman caught our attention. Titled Is There A “Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings?, it details the process known as financial repression, where sovereign debts are slowly paid off by syphoning private savings from an unaware populace.

In this week's podcast, Chris discusses the mechanics of the process, as well as its probability, with Dan:

To understand financial repression, we have to understand that we've been there before. Many nations have gone through periods in the past where they've had very high levels of government debt. And there are four traditional ways of dealing with that.

One of them is austerity. Everyone understands that. You raise the tax rates. You lower the government spending. This is a painful choice. It can last for decades. And what do you think the voters think about that?

There is another option and this we can call this the Argentina option. And that's defaulting on government debts. It’s radical. Everybody understands it. How do the voters feel about it?

There is a third option is rapidly destroying the value of currency. Creating high rates of inflation that very quickly wipe out the true value of a national debt. But that also wipes out the true value of everyone else’s savings and salaries and so forth. It is such an obvious process you can’t really hide it. So how do the voters feel about that?

Those first three – they all work. They've all been done before. But they're all very painful and make the voters very angry.

Now there is a fourth way of doing this. There's nothing controversial about its existence; it's not the slightest bit controversial for professional economists or people who have studied economics extensively. It's financial repression. And it works. It's what the advanced western nations did after World War II. It was a process that took 25 to 30 years, depending on the country. The West went from an average debt as a percentage of national economy from over 90% to under 30%. So we know it works in practice.

To understand what this fourth alternative is where governments like to go is that there are no political repercussions. It's actually just as painful for the population as a whole. You've got to get the money one way or another. But financial repression is, for most people, just complex enough that the average voter never gets it. And because they don’t get it, they're paying the penalty, but they don’t realize it. And they don't see anyone to blame. That's really good if you want to stay in office.

The key is a concept called negative real interest rates. If the rate of inflation is higher than the interest payments you are taking in, savers are losing purchasing power every year. Remember, this is a zero sum game between the borrower and the saver -- with the saver funding the borrower. Every dollar in purchasing power that the savers, which are you and I, are losing every year -- that goes to the benefit of the borrower, which in this case is the Federal government.

a reply to: Flatfish

originally posted by: lordcomac
Did anyone actually think they would see that money again?

My parents probably won't see theirs- and I know damn well I won't see mine. Gub'ment puts a gun to my head- I put 4k into "SSC" last year against my own will- knowing full well I'll never get it back.

That 4k could have done a lot more good in my pocket, going towards an actual retirement plan- a piece of land to call home, or a tractor to work it.


We're all working until we die- one way or the other.

This isn't about the govt. stealing anyone's pension money, it's about the govt. not having sufficient funds in the PBGC program to cover the losses of mismanaged employee benefit trust funds in the private sector.

The govt. didn't cause the funds to go broke, the trustees of the funds coupled with fraud on Wall St. did that.

With respect to you ever seeing you S.S., naysayers have been saying the same thing you are saying, almost since the day the program was first instituted and guess what? People are still getting their checks.

I'm not saying that the S.S. program has been properly managed over the years, but the problems it faces are not un-fixable and I'll just bet that it's still around for future beneficiaries for some time to come.

Furthermore, it's always been a "pay-it-forward" kind of system where those who are currently working, pay for the benefits of those who are retired.

One of the biggest problems being faced by S.S. is the fact that due to the outsourcing of American jobs and the recent surge of retiring "baby-boomers" the ratio of workers to retirees has been altered to the point of unsustainablity.

Rest assured, there are ways to fix these and other problems facing the S.S. program. It's just going to take the political will to address them in a rational and prudent manner.

On another note, considering the fact that I recently heard John Boehner talking about how he has been searching for a way to fund the highway trusts funds tasked with building and maintaining our infrastructure for the last 2 1/2 yrs. and reporting further, that he had yet to find anything, I doubt the necessary will to fix S.S. will come anytime soon.

At least not until we get a Congress who's number one goal is not to destroy our govt. by defunding every federal program in existence, with the exception of the industrialized military complex.

It's really all about priorities.

a reply to: arjunanda

Thanks for posting the info. I haven't had time to watch the video yet but the article was a good read, I'm just not sure I buy into his theory.

While I agree that we've all witnessed the first three methods in action, the fourth method described in the article would seem to be an underlying reality that still exist regardless of the debt. elimination measures being taken.

When was the last time that your saving account outpaced inflation? I can't remember a time and I think it has more to do with the realities of capitalism than it does being a nefarious plot by governments to steal capital from it's citizens.

If I could hide my money in a savings account and know that it would consistently outpace inflation, that's exactly what I'd do.

To my knowledge, that's never been the case regardless of which debt. recovery mode we're in.

I just get the uneasy feeling that this is an attempt to capitalize on the current situation in Greece and possible remedies that they may very well be considering, and use them to infer that Obama is planning to somehow do the same thing here.

I could be wrong but right now I just get the feeling that this is just more fear mongering and I haven't seen anything that would suggest that there's any evidence implying that Obama is considering anything like it.

Now if you want to talk about the many ways that banks screw us out of our money, that's a horse of a different "flavor," (taste like s**t) and the possibilities are endless.

Cheers, Flatfish