Pension Pulse

Tara Perkins of the Globe and Mail reports, OMERS boosts return, funding deficit swells : The Ontario Municipal Employees Retirement System has posted a 12.01-per-cent rate of return for 2010, up from 10.6 per cent in 2009. But its funding deficit has tripled to $4.5-billion as its pension benefit obligations have increased. OMERS released a summary of its financial results Monday, with detailed information to follow later this month. The fund, which provides pension services to more than 400,000 people, is grappling with a shortfall in the wake of the recession. Temporary contribution increases and benefit reductions are part of the strategy to return it to balance. It requires a 6.5-per-cent annual return to bring itself back into a surplus position in 2025. “Based on our asset mix policy and active investment strategy, we believe we can generate average returns of 7 per cent to 11 per cent annually over the next five years,” said chief financial officer Patrick Crowley. ...

William S. Lerach reports in the Huffington Post, Blame Wall Street, Not Hard Working Americans, For The Pension Funds Fiasco : The confrontations in Wisconsin and other states are the opening salvo of a political blame game -- who is responsible for the gigantic public pension fund deficits that threaten states' solvency and workers' retirement savings? The conservative spin machine blames public employees, claiming their greedy unions extorted extravagant and now unaffordable benefits which justify pension cutbacks and union-busting. This is a false. The real cause of the pension fund debacle is the greed of Wall Street and its corporate allies. It's a result of their dismantling of our nation's regulatory safeguards and Wall Street's capture and abuse of America's public pension funds -- charging them huge management fees, while losing trillions of dollars of pension fund assets in risky investments. Wall Street developed with no regulation. ...

The LA Times posted an editorial, Day of reckoning on pensions : The housing bubble and subsequent Wall Street collapse wreaked havoc on the nation's retirement savings, as many pension funds and 401(k) plans suffered losses of 30% or more. State and local governments are now facing huge unfunded pension liabilities, prompting policymakers to scramble for ways to close the gap without slashing payrolls and services. But a new report from the Little Hoover Commission in Sacramento makes a more troubling point: Many state and local government employees have been promised pensions that the public couldn't have afforded even had there been no crash. The commission's analysis of the problem is hotly disputed by union leaders, who contend that the financial woes of pension funds have been overblown. The commission's recommendations are equally controversial: Among other things, it urges state lawmakers to roll back the future benefits that current public employee...

Bertrand Marote of the Globe and Mail reports, Caisse posts 13.6% return : The Caisse de dépôt et placement du Québec posted a robust 13.6-per-cent return on its investments last year, solidifying its ongoing recovery from a disastrous 2008 loss. The results for 2010 beat the 11.25-per-cent median return of large pension funds in 2010 as estimated by RBC Dexia Investor Services Ltd. The Caisse - Canada's largest public pension fund - said it outperformed its own benchmark index by 4.1 per cent for the year ended Dec. 31, 2010. At the end of 2010, the Caisse's net assets stood at $151.7-billion, up from $131-billion in the previous year. The increase was due to net investment results of $17.7-billion plus $2.4-billion in net deposits. The Caisse is now almost back to pre-2008 levels. It posted a staggering 25-per-cent loss - $40-billion - on its investments in 2008. Last year, the Caisse had a 10-per-cent return, below the 15.48 per cent median return of its peers. “In a year ma...

Chikafumi Hodo and Hiroyasu Hoshi of Reuters report, Japan's giant pension fund warns on nation's debt : Japan's $1.4 trillion Government Pension Investment Fund (GPIF), the world's largest pension fund, warned the country needs to resolve its debt problems, although, for now, it is sticking to its basic investment strategy. GPIF Chairman Takahiro Mitani said in an interview with Reuters that Japan's bulging public debt -- the largest among developed countries at double the size of its $5 trillion economy -- would reach a crucial point in five to 10 years if the problem is not resolved. The GPIF, whose asset size is larger than both the Canadian and Indian economies, is a major force in the Japanese government bonds (JGB) market, where it parks two-thirds of its assets. The GPIF plans to diversify its portfolio, however, by investing in emerging markets, where its hopes to start channeling funds in the financial year that starts in April. "We ...

Dan Bigman of Forbes wants to remind you Wisconsin’s Public Pension Problems Are Your Problem, Too . But are they really or is this more fear mongering? Zach Carter of the Huffington Post reports, Wisconsin's Pension Fund Among Nation's Healthiest : While Wisconsin Gov. Scott Walker (R) has painted a dire picture of his state's pension obligations, Wisconsin's pension fund for public employees is among the nation's strongest, according to a report by the nonpartisan Pew Research Center*. The Pew report, issued last year, concluded that Wisconsin is a "national leader in managing its long-term liabilities for both pension and retiree health care." Walker has cited the fund's lack of sustainability as grounds for his plan to revoke collective bargaining rights for state employees, but that proposal has sparked outrage among state employees and drawn tens of thousands of protesters to the state's capitol. "We're going to ask our state and l...