Pension Pulse

Simon Maierhofer of ETFguide.com writes Whats Next - Minor Correction or Major Collapse? : Over the past few months, every attempt by the bears to depress prices has been met with renewed buying pressure, resulting in even higher prices. What goes up, however, has to come down and some subtle signs are indicating that this decline might be more than a simple correction, much more. It was after midnight on April 15th, 1912 when the unsinkable did the unthinkable. Built and labeled as unsinkable, the Titanic was the most advanced and largest passenger steamship of its time. Even though the Titanic's crew was aware of the fact that the waters were iceberg-infested, the ship was heading full-steam for a destination it would never reach. Being aware of danger is one thing; acting prudently for protection is another. Today, investors find themselves in an environment that is infested with symbolic icebergs. For savvy investors willing to pay attention and heed warnings, this doesn’t nece...

Frank Swedlove, President of the Canadian Life and Health Insurance Association, wrote an editorial for the National Post stating that a new government pension plan is not necessary : The financial crisis has elicited much hand-wringing and introspection about the need for a drastic overhaul of Canada's pension system. Canadians are increasingly concerned about their retirement income security. In addition to declining membership in defined benefit (DB) pension plans, these concerns have been dramatically heightened by market downturns that began last year -- with the result that we now hear calls from some quarters for government-sponsored defined contribution (DC) pension plans. To answer those calls with such plans would be a mistake. Governments are quite rightly asking how to ensure that the retirement savings of Canadians grow, are secure and will generate adequate income when needed. Canada's life and health insurers welcome this interest. This emphasis on retireme...

In his November investment outlook, Midnight Candles , PIMCO's Bill Gross tells us that assets are way overvalued: Let me start out by summarizing a long-standing PIMCO thesis: The U.S. and most other G-7 economies have been significantly and artificially influenced by asset price appreciation for decades. Stock and home prices went up – then consumers liquefied and spent the capital gains either by borrowing against them or selling outright. Growth, in other words, was influenced on the upside by leverage, securitization, and the belief that wealth creation was a function of asset appreciation as opposed to the production of goods and services. American and other similarly addicted global citizens long ago learned to focus on markets as opposed to the economic foundation behind them. So far I am with you, Bill. We basically forgot that real wealth comes from real production not from trading stocks, bonds, and commodities on-line. Forget the clowns on CNBC where you regularly app...

The Honourable Jim Flaherty, Canada's Minister of Finance, released a reform plan for the federal private pension legislative and regulatory framework on Tuesday: "Our Government has listened carefully to Canadians," said Minister Flaherty. "We understand the value of secure and sustainable pension plans. We are proposing a balanced package of measures for the benefit of pension plan sponsors, plan members and retirees." Today’s announcement comes out of extensive consultations with Canadians, beginning with the January release of a discussion paper, Strengthening the Legislative and Regulatory Framework for Private Pension Plans Subject to the Pension Benefits Standards Act, 1985 , and including online consultations. In March and April, Ted Menzies, Parliamentary Secretary to the Minister of Finance, chaired a series of national public and private consultation meetings across Canada to hear the views of Canadians on strengthening the framework. The package inc...

Reuters reports that Pensions funds recouping some of 2008 losses : Pension funds tracked by the OECD recovered $1.5 trillion (918 billion pounds) in the first half of 2009 of the $5.4 trillion they lost in market value last year, the Organisation for Economic Co-operation and Development said on Monday. "The recovery in pension fund performance has continued through September 30, 2009, on the back of strong equity returns, but it will be some time before the 2008 losses are fully recouped," the Paris-based agency said. Pension funds staged a partial recovery in the first half, generating investment returns of 3.5 percent in nominal terms, said the OECD, whose 30 members are mostly rich industrialised economies (click on image above to enlarge) . Best performing funds in the OECD area were, on average, in Norway and Turkey, with nominal returns of more than 10 percent, compared with nominal returns of 4 percent for funds in the United States, the report said. Total pension f...

The FT reports that Soros calls Wall St profits ‘gifts’ from state : The big profits made by some of Wall Street’s leading banks are “hidden gifts” from the state, and taxpayer resentment of such companies is “justified”, George Soros, the fund manager, said in an interview with the Financial Times . “Those earnings are not the achievement of risk-takers,” Mr Soros said. “These are gifts, hidden gifts, from the government, so I don’t think that those monies should be used to pay bonuses. There’s a resentment which I think is justified.” Mr Soros, who joins a transatlantic chorus calling for limits on risk, leverage and compensation at big banks, said proprietary traders belong at hedge funds, not at banks, and that the compensation at Wall Street companies should be limited to prevent excessive risk. “With the too-big-to-fail concept comes a need to regulate the payments that employees receive,” said Mr Soros, who will elaborate on his views in lectures in Budapest next week. Some bank...

A follow-up to my last comment on the death-defying dollar . In his NYT op-ed column, Paul Krugman writes about The Chinese Disconnect and notes the following: Many economists, myself included, believe that China’s asset-buying spree helped inflate the housing bubble, setting the stage for the global financial crisis. But China’s insistence on keeping the yuan/dollar rate fixed, even when the dollar declines, may be doing even more harm now. Although there has been a lot of doomsaying about the falling dollar, that decline is actually both natural and desirable. America needs a weaker dollar to help reduce its trade deficit, and it’s getting that weaker dollar as nervous investors, who flocked into the presumed safety of U.S. debt at the peak of the crisis, have started putting their money to work elsewhere. But China has been keeping its currency pegged to the dollar — which means that a country with a huge trade surplus and a rapidly recovering economy, a country whose currency shou...