Showing posts from November, 2017

Workers and Retirees Over Bondholders?

The National Union of Public and General Employees ( NUPGE ), one of Canada's largest labour organizations with over 370,000 members, put out a press release recently, NDP private member's bill shows pension plans can be protected : “When a company in financial difficulties is giving $1.4 billion to shareholders and handing executives millions of dollars in bonuses, it’s ridiculous to claim that legislation to protect pensions will affect the ability of the company to survive. What legislation to give pension plans priority in bankruptcy proceedings will do is protect workers and retirees from greed and incompetence.” — Larry Brown, NUPGE President Ottawa (27 Nov. 2017) — A private member's bill, Bill C-384, introduced by Scott Duvall, NDP MP for Hamilton Mountain, shows that it is possible to protect pensions when companies enter bankruptcy proceedings. In the last few years there has been a growing trend where workers and pensioners are seeing significant cuts

The Grand Cayman Pension Scam?

David Sirota and Lydia O'Neal  of The International Business Times report, Paradise Papers: Your Retirement Cash May Be In The Caymans. Can You Get It Back? : The release of the so-called “ Paradise Papers ” touched off new scrutiny of how moguls, celebrities and politicians stash their cash in offshore tax havens. The practice, though, is hardly limited to the global elite. In fact, government documents show that state and local officials have sent hundreds of billions of dollars of public sector workers’ retirement savings to a tiny archipelago most famous for white-sand beaches — and laws that shield investors from taxes. Operating outside the U.S. legal system, the offshore accounts in the Cayman Islands give Wall Street firms leeway to make complex international investments and to earn big fees off investors' capital. But with offshore accounts featuring prominently in high-profile Ponzi schemes, some critics warn that the use of tax havens can endang

North Carolina's Pension Woes?

Chris Butera of Chief Investment Officer reports, More Trials Ahead for North Carolina Pension Fund : Despite State Treasurer Dale Folwell’s agency slashing millions in outside management fees, North Carolina’s $96 billion pension fund is going to need to do more to remain solvent and satisfy retirements of its nearly 1 million state employees. While Folwell delivered on his campaign promise to make heavy cuts on the fees to the tune of $600 million, drawing some praise from his peers, he faced some criticism for his decision to transfer funds to low-earning, short-term accounts. reports that critics argue that while safe, keeping the transfer funds in savings accounts cost the pensions “tens of millions” in earnings during this year’s market growth . However, despite these cuts and the fund being commonly referred to as one of the best-funded in the country, as per WRAL, it must still pay out $6 billion per year . In addition, state government and employees only pa

Time To Dismantle US Public Pensions?

Rebecca Moore of Plan Sponsor reports, Public Pensions Have Been Able to Pay Promised Benefits : Some policymakers want to close participation in a public pension plan to all new hires, cut benefits and increase employee contributions, or convert defined benefit (DB) plans pensions into defined contribution (DC) plans. They usually cite the underfunding of public pension plans as the reason for these ideas. New research shows that funding status has little correlation with a pension fund’s ability to pay its promised benefits . Michael Kahn, director of research for the National Conference on Public Employee Retirement Systems (NCPERS) used data from the annual survey of public pensions by the U.S. Census Bureau for 1993 to 2016 and other data and found that during the last quarter century or so, state and local pension plans have always been able to meet their benefit and other payment obligations. In four years (2002, 2008, 2009 and 2012), income from contributions and inves

The Silence of the Bears?

Sven Henrich of the Northman Trader posted a market comment earlier this week, The Silence of the Bears (click on images to enlarge; added emphasis is mine): The silence of the bears is deafening. And who can blame them? The last 2 years have been absolutely brutal for any fans of price discovery, volatility and anything analytical mattering . Nothing matters. Be it divergences, valuations, earnings misses, slowing data, yield curve, equal weight, internals, catastrophes in nature, slowing loan growth, slowing auto sales, slowing real estate, retail apocalypse, debt levels, etc…I can drone on. Nothing matters. Markets keep drifting higher despite it all. Price discovery as we used to know it, the back and forth of buyers and sellers engaging in the argument of forward valuations based on expected earnings growth, has ended with the disappearance of sellers as part of the normal market functioning: Corrections as a means of price discovery don’t exist any more. Every day we