Pension Pulse

I spent the afternoon reading a fascinating paper by Shimshon Bichler and Jonathan Nitzan, Systemic Fear, Modern Finance and the Future of Capitalism (PDF file is available here ). The introduction sets out the intent of their research: The specific focus of the article is two historical ruptures of modern finance – the periods of 1929-1939 and 2000-2010. During both periods, capitalists abandoned the conventional forward-looking ritual of capitalization, resorting instead to the backward-looking posture of pre-modern finance. In our view, these rare episodes are of great importance for understanding the nature of capitalist confidence and the capitalists’ ability to rule – as well as the possibility that this system of rule will collapse. Our inquiry seeks, first, to characterize key features of these episodes; second, to speculate on their causes; and third, to assess, however speculatively, what they might imply for the future of capitalism. While I recommend you carefully read the ...

Given that PSP Investments reported its FY 2010 results , I think it would be useful to compare their results to those of CPPIB who reported back in May (fiscal year for both funds ended on March 31st, 2010). First, let me apologize, as I just noticed I never covered CPPIB's FY 2010 results, only some quarterly results. Let's go back to the May 20th press release : The CPP Fund ended its fiscal year on March 31, 2010 with net assets of $127.6 billion, an increase of $22.1 billion from the prior year end. The increase in assets essentially put the Fund back to its previous highest level reported on June 30, 2008, prior to the onset of the financial crisis. The Fund rose due to increases of $16.2 billion in investment income and $6.1 billion in CPP contributions, minus operating expenses. The portfolio returned 14.9 per cent for fiscal 2010 compared with a prior year decline of 18.6 per cent. “The CPP Fund delivered one of its highest-ever annual returns, driven large...

The 2010 Annual Report of the Public Sector Pension Investment Board (PSP Investments or PSPIB) was tabled with the Parliament of Canada on July 21st, 2010. On Thursday, PSP Investments posted this press release on its FY2010 results : The Public Sector Pension Investment Board (PSP Investments) announced today that it recorded an investment return of 21.5% for the fiscal year ended March 31, 2010 (fiscal year 2010), exceeding the Policy Benchmark return of 19.8% by 1.7%. The 2010 performance is one of PSP Investments’ best performances to date and reflects a return to fundamentals from the distressed valuations resulting from the liquidity crisis of the past two years. In fiscal year 2010, consolidated net assets increased by $12.5 billion, or 37%, to reach $46.3 billion, a new high which exceeds the previous peak of $38.9 billion recorded at the end of March 2008. During fiscal year 2010, PSP investments generated net income from operations of $7.5 billion and received $5.0 billion ...

Earlier this week, Michael B. Marois of Bloomberg Businessweek reported, California Teachers Fund Earns 12% After Record Loss Last Year : The California State Teachers’ Retirement System, the second-biggest U.S. public pension fund, earned 12.3 percent in the year ended June 30, led by gains in stocks and bonds that offset losses in real estate. Calstrs, as the Sacramento-based fund is known, ended the fiscal year with $129.8 billion under management, up from $118.8 billion a year earlier. Stock holdings earned 14.5 percent and its bonds rose 12.3 percent, the fund reported today. Investments in private equity funds rose 21.7 percent, while real estate fell 12.4 percent. “We’re not out of the woods yet,” Calstrs Chief Investment Officer Christopher J. Ailman said in a statement. “The American economy suffered a near-death experience in 2008, and it’s going to take some time to fully recuperate from that.” The gain comes as the fund that provides benefits for...

Mary Williams Walsh of the NYT reports, Facing Pension Woes, Maine Looks to Social Security : Lawmakers in Maine have found an unusual tool for tackling their state’s pension woes: Social Security . Just as workers in the private sector participate in Social Security in addition to any pension plan at their companies, most states put their workers in the federal program along with providing a state pension. Maine and a handful of others, however, have long been holdouts, relying solely on their state pension plans. In addition, most states have excluded some workers — often teachers, firefighters and police — from the national retirement system and its associated costs, 6.2 percent of payroll for the employer and an equal amount for the worker. Now, Maine legislators have prepared a detailed plan for shifting state employees into Social Security and are considering whether to adopt it. They acknowledge it will not solve their problem in the short term but see lo...

Tara Perkins of the Globe & Mail reports, Onex, CPPIB unite in bid to buy U.K. firm : O nex Corp. and the Canada Pension Plan Investment Board are joining forces on the proposed takeover of a major British manufacturing and engineering company, just as the U.K. begins its own “hollowing-out” debate. Toronto-based Onex and the CPPIB have not launched a formal bid but have proposed a deal, worth more than $4-billion, for Tomkins PLC . Due diligence on the company is now “at an advanced stage,” Tomkins said in a statement Monday. The proposed takeover comes as North American suitors take advantage of a sluggish British pound to target U.K. companies. Earlier this month, for example, the Ontario Teachers’ Pension Plan closed its £389-million ($625-million) acquisition of Camelot Group Ltd., which operates the U.K. national lottery. Coupled with the lingering effects of the global recession, fears are mounting that a number of British companies will be scooped up by foreig...