Pension Pulse

Melody Petersen of the Los Angeles Times reports, In strategy shift, CalPERS looks to cut financial risk : California taxpayers have never paid more for public worker pensions, but it's still not enough to cover the rising number of retirement checks written by the state's largest pension plan. Even before the stock market's recent fall, staffers at the California Public Employees' Retirement System were worried about what they call "negative cash flows." The shortfalls — which totaled $5 billion last year — are created when contributions from taxpayers and public employees who are still working aren't enough to cover monthly checks sent to retirees. To make up the difference, CalPERS must liquidate investments. With more than $300 billion in investments, the nation's largest public pension fund is in no danger of suddenly running out of cash. But even its staff acknowledges in a recent report that despite fast-rising contributions fro...

Dan Strump and Josie Cox of the Wall Street Journal report, U.S. Stocks Rally Amid Recovery in Global Markets : Stocks soared for the second day in a row, with the Dow Jones Industrial Average erasing its losses for the week, as renewed optimism about the U.S. economy eased concerns about the pace of global growth. The gains came amid a broad rebound in financial markets, which had been pummeled by anxiety about China’s slowdown since the world’s second-largest economy shocked investors by devaluing its currency earlier this month. Oil prices soared more than 10% to their biggest percentage gain in six years amid a surge in commodities. The Dow Jones Industrial Average jumped 369.26 points, or 2.3%, to 16654.77. Coupled with Wednesday’s 619-point surge, blue chips are now up 1.2% for the week. The gains are the latest in a week of wild swings for stocks. Traders say the deep declines of Monday and Tuesday left investors eager to snap up stocks on the cheap, although many ...

Rob Copeland of the Wall Street Journal reports, Hedge Funds Bruised by Stocks’ Meltdown : Hedge-fund managers like to promise their investors protection from market swings. In the recent stock swoon, many were caught off guard. Billionaire managers such as Leon Cooperman, Raymond Dalio and Daniel Loeb are deeply in the red this month, left flat-footed by the quick plunge for stocks world-wide. Mr. Cooperman’s Omega Advisors posted a 12% decline this month through Wednesday and 10% this year. Mr. Loeb’s Third Point LLC and William Ackman’s Pershing Square Capital Management are also down big, erasing their gains for the year. Other traders suffered amid this week’s volatility. Monday, when the market collapsed more than 1,000 points in its largest ever intraday point decline, marked one of the worst days for many managers since the crisis. That is a hit to an industry that has for years excused its relative underperformance compared with benchmarks by promising that collect...

Matthew Cunningham-Cook of the International Business Times reports, At Chicago Pension Fund, Questions Raised On Conflicts of Interest : Chicago pension officials wanted to know where to deposit the $11 billion that the city’s teachers had saved for their retirement benefits, so they turned in 2014 to the outside consulting firm they’d hired for financial advice. Such consultants are employed to provide guidance that's expected to be impartial -- not shaped by private business relationships that might make its recommendations less than objective. So when the firm, Callan Associates, told pension trustees at a February meeting to give the cash to a bank called Bank of New York Mellon (BNY), the board’s trustees agreed to follow the advice. What they were not told at that meeting, however, is that BNY pays Callan for both general consulting services and financial education programs. Those payments, say financial experts, represent an inherent conflict of interest. They eff...

Dean Beeby of CBC News reports, Document raises questions about Harper retirement policies : Canada scores poorly among developed countries in providing public pensions to seniors, according to an internal analysis of retirement income by the federal government. And voluntary tax-free savings accounts or TFSAs, introduced by the Harper Conservatives in 2009, are so far unproven as a retirement solution and are largely geared to the wealthy. Those are some highlights of a broad review of Canada's retirement income system ordered by the Privy Council Office and completed in March this year by the Finance Department, with input from several other departments. The research, compiled in a 30-page presentation deck, was created as the government came under fire from opposition parties, some provinces and retiree groups for declining to improve Canada Pension Plan or CPP payouts through higher mandatory contributions from workers and businesses. The CPP issue has already bec...