Pension Pulse

The Windsor Star published an article by Craig Trudel of Bloomberg, Big improvement in pension plays, GM and Ford say : While drawing car buyers and praise from the likes of Consumer Reports, General Motors Co. and Ford Motor Co. are getting a grip on pensions that will free up cash to develop future hits. Over the long term, this should allow more spending on the core business and less on retirees. That in turn creates a brighter outlook for the companies, which are already delivering more competitive cars like the Chevrolet Impala and Ford Fusion, and better-than-estimated profits. "It's one less thing investors have to worry about on the risk side," said Michael Razewski, a New York-based principal at Douglas C. Lane & Associates, which oversees $3.1 billion, including Ford shares. "The less Ford has to focus on funding the pension, the more they can focus on driving innovative products and services and meeting customer demand." "We won...

A few weeks ago, Bloomberg Businessweek published a piece by Sheelah Kolhatkar, The Hedge Fund Myth: At the height of the financial crisis in 2008, a group of famous hedge fund managers was made to stand before Congress like thieves in a stockade and defend their existence to an angry public. The gilded five included George Soros, co-founder of the Quantum Fund; James Simons of Renaissance Technologies; John Paulson of Paulson & Co.; Philip Falcone of Harbinger Capital; and Kenneth Griffin of Citadel. Each man had made hundreds of millions, or billions, of dollars in the preceding years through his own form of glorified gambling, and in some cases, the investors who had poured money into their hedge funds had done OK, too. They were brought to Washington to stand up for their industry and their paychecks, and to address the question of whether their business should be more tightly regulated. They all refused to apologize for their success. They appeared untouchable. What’s h...

The Economist reports, The Unsteady States of America : When Greece ran into financial trouble three years ago, the problem soon spread. Many observers were mystified. How could such a little country set off a continental crisis? The Greeks were stereotyped as a nation of tax-dodgers who had been living high on borrowed money for years. The Portuguese, Italians and Spanish insisted that their finances were fundamentally sound. The Germans wondered what it had to do with them at all. But the contagion was powerful, and Europe’s economy has yet to recover. America seems in a similar state of denial about Detroit filing for bankruptcy (see article ). Many people think Motown is such an exceptional case that it holds few lessons for other places. What was once the country’s fourth-most-populous city grew rich thanks largely to a single industry. General Motors, Ford and Chrysler once made nearly all the cars sold in America; now, thanks to competition from foreign brands built in no...

Miles Costello and Alex Spence of The Times report, Supreme Court victory for Lehman and Nortel pensioners : The Supreme Court has ended three years of uncertainty for thousands of members of the Lehman Brothers and Nortel pension schemes as it ruled that they had a fair claim on the collapsed companies’ assets. In a landmark case that has implications for all future insolvencies, the Court ruled that the schemes had an equal claim on assets alongside other creditors. Had the case gone against them, the Lehman and Nortel members could have been forced below other creditors in the repayment queue at collapsed companies and set a precedent for administrators across the board. The outcome was hailed by experts and those involved in the wrangle as a “victory for common sense” that shored up the rights of 40,000 members of Nortel’s scheme and 4,000 former staff at Lehman. Experts also said it was more likely that both schemes would avoid being forced into the Pension Protection...

The British Columbia Investment Management Corporation (bcIMC) released its results for 2012-2013 : The British Columbia Investment Management Corporation (bcIMC) today released its combined pension plan returns for the year ending March 31, 2013 as part of its 2012–2013 Annual Report. With a one-year annual return of 9.5 per cent, net of fees, the results exceeded a combined benchmark of 7.8 per cent and added $1.5 billion in value to bcIMC's pension plan clients. “Our domestic real estate and public equities portfolios were the primary drivers of our positive results last year,” said Doug Pearce, Chief Executive Officer/Chief Investment Officer of bcIMC. “On behalf of our clients, we began significantly increasing asset allocations towards real estate and infrastructure in 2011, and this heavier weighting to real assets is beginning to drive investment returns.” There were a number of highlights from the past year, including: Committing $3.4 billion to investments ...

Steven Yaccino and Michael Cooper of the NYT report, Cries of Betrayal as Detroit Plans to Cut Pensions : Gloria Killebrew, 73, worked for the City of Detroit for 22 years and now spends her days caring for her husband, J. D., who has had three heart attacks and multiple kidney operations, the last of which left him needing dialysis three times a week at the Henry Ford Medical Center in Dearborn, Mich. Now there is a new worry: Detroit wants to cut the pensions it pays retirees like Ms. Killebrew, who now receives about $1,900 a month. “It’s been life on a roller coaster,” Ms. Killebrew said, explaining that even if she could find a new job at her age, there would be no one to take care of her husband. “You don’t sleep well. You think about whether you’re going to be able to make it. Right now, you don’t really know.” Detroit’s pension shortfall accounts for about $3.5 billion of the $18 billion in debts that led the city to file for bankruptcy last week. How it handles th...