Pension Pulse

Greg Roumeliotis and Simon Meads of Reuters report, "Gordon Gekko" Geldof praises private equity : Sporting what he joked was his "Gordon Gekko" shirt, Irish rock star Bob Geldof cut an unlikely private equity figure on Wednesday as he exalted the industry's virtues and urged top financiers in their annual gathering to invest in Africa. Speaking for an hour without notes at the SuperReturn International conference in Berlin, Geldof made an impassioned address peppered with expletives designed to tug on heartstrings but also appeal to private equity's profit-making instincts. "You must go and kick the tires. You are the guys who go where capital needs to go. Capital will only go where it is sent," Geldof said, stretching out his arms as if to reach his audience of private equity executives. "Do we leave this vast continent, with all the resources we will ever need, do we leave it to China ? Eight miles from Europe, do we just leave it to them...

Pension Funds Insider reports, Hedge funds back in the balance for pension fund trustees : A Deutsche Bank survey indicates that pension fund trustees are becoming increasingly sure of the merits of hedge fund investing, despite a disappointing year for the industry's returns. The firm's annual international survey of hedge fund investors found that only 16% of respondents cited trustees and their boards' views on hedge funds as the biggest impediment to further increasing their hedge fund portfolios, down significantly from 30% in 2011. The same survey indicated that 38% of investors trustee boards strongly believe in the validity of hedge funds as an investing tool. That is an increase from 25% fully-fledged hedge fund fans in 2011, which Anita Nemes, Deutsche Bank's global head of capital introduction and report author, explained to Pension Funds Insider was most likely due to experience and the growing institutional offering that hedge funds provide. Th...

Robert Snell and Christine MacDonell of the Detroit News report, 'It just blows my mind,' a pension board trustee says of kickback probe charges : Former City Treasurer Jeff Beasley was accused in a federal indictment Tuesday of accepting cash, golf clubs, gambling money, tickets to Las Vegas shows, massages, limousine rides and free flights in return for approving more than $200 million in pension fund investments. Many of those deals fizzled, costing the pension funds more than $84 million, money that could have been used to pay for benefits of thousands of retired Detroit municipal employees. Beasley, a fraternity brother of ex-mayor Kwame Kilpatrick at Florida A&M University, is portrayed as the gatekeeper to hundreds of millions of dollars controlled by the city's pension funds. Prosecutors allege he wielded power over people and businesses seeking investments from the Police and Fire and the General Retirement pension funds because he sat on both boar...

Elena Becatoros and Nicholas Paphitis of the Associated Press report, Greece approves tough salary, pension cuts : Greece's Parliament late on Tuesday approved new cuts in public sector pensions and government spending required to secure a second package of international rescue loans. Lawmakers voted 202-80 in favor of cutbacks worth a total euro3.2 billion ($4.31 billion) and aimed at bringing the 2012 budget back in line with targets. Lawmakers from both parties in Prime Minister Lucas Papademos' coalition, the majority Socialists and the conservatives, backed the legislation. Earlier, the debt-crippled country's Cabinet decided to apply recent labor reforms, including deep cuts to the minimum wage, retroactively to Feb. 14. Greece is obliged to adopt a series of austerity measures and reforms before it can receive any funds from its new euro130 billion ($174 billion) package of rescue loans from other eurozone countries and the International Monetary Fund. ...

Barbara Shecter of the Financial Post reports, David Denison stepping down as head of Canada Pension Plan Investment Board : David Denison is stepping down as head of the Canada Pension Plan Investment Board on June 30. He will be replaced by Mark Wiseman, 41, who is currently executive vice-president of investments at CPPIB, the investing arm of the Canada Pension Plan. Mr. Denison, who turns 60 this year, informed the board of CPPIB in June of 2009 that he intended to retire in 2012. He has been chief executive and president since January of 2005. Mr. Wiseman joined CPPIB that same year, making the leap from the Ontario Teachers’ Pension Plan. He has been responsible for CPPIB’s overall global investment programs, along with other responsibilities related to the organization’s long term strategy. Mr. Wiseman earned both an MBA and a law degree from the University of Toronto, as well as a master’s degree in law from Yale University. “I can think of no one better suited an...

Are you suffering from Greek bailout burnout? If so, listen to Lauren Lyster's Capital Account interview with economist Constantin Gurdgiev of the True Economics blog. Gurdgiev discusses the drain of human capital on Europe's struggling economies and thinks the LTRO will lead to stagflation and ultimately a bust in three years. Check out the chart above on youth unemployment across Europe, courtesy of Marginal Revolution . It's a disaster and it isn't that much better on this side of the Atlantic. Also love the discussion at the end on the FBI's new public service announcement featuring Michael Douglas asking people to come forth if they know about insider trading (see ad below). Somewhat disconcerting that law enforcement has resorted to these silly ads. My advice, hire experts, set up a special task force looking into predatory trading and put more teeth in the SEC's whistleblower rule . Wall Street's wolves are still getting away with murder.

Institutional Investor reports on how the government is robbing pension plans (h/t, Yves): Financial repression arrives not with a bang but with a whisper. “It is a very stealthy tax,” says economist Carmen Reinhart of the Peterson Institute for International Economics. Reinhart is the toast of economic circles these days for speaking out about the newest way Western governments are using financial repression to liquidate their debts, particularly after a financial crisis. They’re doing this on the backs of savers, including pension funds, according to economists. In practice, financial repression can lead to “the rape and plunder of pension funds,” Reinhart tells Institutional Investor . Financial repression consists of very low nominal interest rates combined with captive lending by large banks or pension funds to a government. The low, stable interest rate facilitates the servicing costs of large public debts. Sometimes modest inflation is added to the mix. This resu...

Follow-up to my earlier comment on OMERS' 2011 results . James Nash of Bloomberg reports, California Pension Looks to Ontario Experience to Reduce Outside Managers : The California State Teachers’ Retirement System, exploring changes in hiring and pay to reduce its dependence on external managers, is looking to one of Canada’s biggest public retirement funds for advice. The second-largest U.S. public pension, which manages a third of its $152.7 billion portfolio in-house, is consulting the Ontario Municipal Employees Retirement System (OMERS) , which self- manages about 85 percent of its C$55.1 billion ($55.1 billion) portfolio. The California fund posted a 2.3 percent gain on investments in 2011, reducing its ability to meet long-term obligations to 856,000 members and their families, while the Ontario fund reported a return on assets of about 3.2 percent. Following the Ontario plan’s model, in which investment officers are treated as employees of a corporation, might give Calst...

Doug Alexander of Bloomberg reports, Omers Posts 3.2% Return in 2011 Led by Private Investment Gains : Ontario Municipal Employees Retirement System, a pension fund manager in Canada’s most- populous province, posted a 3.2 percent return on investments last year, led by private equity, real estate and infrastructure holdings. Net investment income was C$1.7 billion ($1.7 billion), the Toronto-based pension fund manager said today in a statement, compared with C$5.5 billion in 2010. Assets climbed 3.4 percent to C$55.1 billion from C$53.3 billion a year earlier, as gains in private investments offset declines in stocks and bonds. “Our 2011 results are therefore a tale of two halves -- strong positive returns in private markets, and negative returns in the public markets,” Michael Nobrega, the chief executive officer, said at a press conference today in Toronto. Omers, as the fund is known, beat the 0.5 percent average return of Canadian pension funds, based on a Jan. 23 report by RBC...