Pension Pulse

David Reilly of the WSJ reports, Pension Gaps Loom Larger : Many of America's largest pension funds are sticking to expectations of fat returns on their investments even after a decade of paltry gains, which could leave U.S. retirement plans facing an even deeper funding hole and taxpayers on the hook for huge additional contributions. The median expected investment return for more than 100 U.S. public pension plans surveyed by the National Association of State Retirement Administrators remains 8%, the same level as in 2001, the association says. The country's 15 biggest public pension systems have an average expected return of 7.8%, and only a handful recently have changed or are reconsidering those return assumptions, according to a survey of those funds by The Wall Street Journal. Corporate pension plans in many cases have been cutting expectations more quickly than public plans, but often they were starting from more-optimistic assumptions. Pension plans at companies in the...

A couple of weeks ago, U2 performed in front of more than 100,000 fans at the Olympic stadium in Athens. My sister, my brother-in-law, family and friends all attended the concert but I had yet to arrive in Greece, so I missed my favorite band. It seems some Greeks were peeved off with some comments Bono made regarding the Greek and Irish economy. I don't know why, his comments were straightforward and he told Greeks not to despair (see below). I did take issue with him comparing himself to Alexander "the M-F" Great and the fact that U2 didn't play some classics like "Bad", "Who's Gonna Ride Your Wild Horses" and "All I Want is You". I will have to wait till July 11th, 2011 when U2 rolls into Montreal. Wonder who Bono will compare himself to then. :)

Had a chat with a buddy of mine in Athens last night who is responsible for a major investment project in Greece. He wasn't as optimistic on the country's economic reforms: "I am not as optimistic as you and I think your stay in Crete is biasing your views. Crete is better off than the rest of Greece. They've been hit, but nowhere near as hard as the rest of Greece." "Unlike elsewhere in Greece, Cretans understand the meaning of service. They take excellent care of their tourists which is why they see repeat tourism every year." (Other places also service their tourists properly, but it's true, Cretan hospitality and generosity is unparalleled). "People like your uncle who you wrote about a few days ago , are the exception to the rule. Most businesspeople here do not think long-term." (That's pretty much true of anywhere else. My uncle is investing in solar and he told me in two or three years, the plant's energy costs will be zero...

A few pension related articles for you to read while I am vacationing in Crete: Battle looms over Nortel pension ‎: Another showdown between two groups of Nortel Networks Corp. pensioners is looming over the former telecommunications giant's huge, underfunded pension plan... A look at state pension changes ‎: Highlights of changes to state government pension plans that affect current retirees and employees, and how much unfunded pension and non-pension retirement ... States cutting benefits for public-sector retirees : The security guards at the headquarters of New Jersey's pension fund have never seen anything like it before: lines of public employees ... New Jersey governor to propose more pension, benefits reforms : Chris Christie is expected to propose pension and health benefits reforms that will cost teachers, police and other public workers more money... France's bitter war over pensions ‎: It is the cornerstone of the government's pension reforms, change that J...

I spent the morning visiting Plastika Kritis , one of the largest Greek plastics manufacturers and a company that my uncle, John Lebidakis, founded with the help of my grandmother's brother. It's a well established company and a true sucess story in Greek industrial manufacturing. My uncle also started a credit union here in Crete, so I had a chance to speak with him about the Greek economy. One thing he made clear to me: Greece will not leave the Eurozone as this is not in the best interest of Greece or Europe. "There are too many interests at stake to let Greece leave the Eurozone. I simply do not see this as a realistic option." On the Greek economy, he emphasized that the biggest problems are competitiveness and the underground economy. "If you look at the scale of the problem, it's daunting, but not impossible to rectify. We need to adopt long-term measures to address these issues." My uncle is a self-made businessman who still pulls in crazy hours ...

If you ask anyone where they were on the morning of September 11th, 2001, they will tell you exactly where and even tell you what they were doing in great detail. It's as if time just stopped and the world came to an end. I was in Crete, and came back from a day of swimming at the beach when I walked into my house and my father told me terrorists just flew planes into the Twin towers. I couldn't believe the horror I was watching on CNN. That was exactly nine years ago, and even though I try not to think about it as much, being in Crete, it feels like it happened yesterday. Last night, Greek television played a documentary on the Marriott World Trade Center survivors . The hotel was crushed except for the south tower, where miraculously a lawyer was saved by a brave fireman and his colleagues. He survived to see his daughter get married and even invited that fireman to the wedding. There was also a lady with severe MS in that hotel who survived and reunited with her mother after...

Michael Lewis wrote an excellent article for Vanity Fair, Beware of Greeks Bearing Bonds (HT: Lambros). I highly recommend you read it carefully. Lewis is a gifted writer who knows how to get at the heart of the issue. Over here, in the Land of Zeus, things are much like they have always been, except people are feeling the economic anxiety stemming from internal deflation. But while we only hear bads news coming out of Greece , let me share with you some good news. I had a chat with an uncle of mine who is extremely well read on Greek economic matters. Here are some things you should bear in mind before you write off Greece: The Greek bailout had nothing to do with Greece. European banks were exposed to subprime debt and they wouldn't have been able to handle another major crisis like Greece imploding (no suprise there). While tourism and shipping still make up the bulk of the Greek economy, traditional and renewable energy are going to grow in the years ahead. Qatar is investi...

Helena Smith of the Guardian reports, Exit from eurozone is Greece's worst option, says Jean-Claude Trichet : Greece's exit from the eurozone would be the "worst possible option", Europe's central bank chief said at the weekend amid concerns over the debt-stricken country's ability to pull itself out of crisis. Ahead of a crucial week for George Papandreou, the prime minister, with threats of renewed civil unrest over government austerity policies in the run-up to the leader's keynote annual economic speech, the ECB president sought to squash speculation that Athens' only solution was to revert to the drachma. "We created the euro to achieve the single market for the prosperity and stability of Europe," Jean-Claude Trichet said at a meeting of prominent political and business leaders on the shores of Italy's Lake Como. "The national governments have to take care of their own national competitiveness within the euro area....

Below is a guest commentary by Martin van Dalen, a portfolio manager in the investment department of the Dutch Social Security Organization: Recent problems in the Dutch pension sector I’m very grateful to Leo Kolivakis’ invitation to write this guest post. Over here, in the Netherlands, the pension sector has a bit of a problem. First, the structure of the Dutch pension system. There’s a nationwide (compulsory) retirement system, paid on a pay-as-you-go basis (out of the first two income tax brackets), providing a pension at 65 at the same level as the national minimum wage (that is, for a married or non-married couple, single persons get about 70%), calculated over a period of 50 years. (For every year you haven’t been a resident, 2% is deducted.) The starting age of 65 is likely to be moved to 66 (from 2020) and 67 (from 2025), but those plans were temporarily shelved when the Dutch government collapsed. Whether the next government will manage to get this done is uncertai...

John Weisenthal of Clusterstock discussed his thoughts on Friday's job figures and put up an image of the scariest jobs chart ever (HT: Réal): The key thing to realize about today's good jobs report is that it was only good relative to expectations. Private sector job creation of 67,000 is not that impressive in any real sense. And indeed, the latest update of the scariest jobs chart ever from Calculated Risk -- which shows how deep these jobs losses are compared to past recessions -- shows this comeback still isn't anything like past comebacks, and it will be ages before we get back to even. Private sector job creation is the key to any sustainable recovery, but as the chart above shows, you need to create a lot of jobs to repair the devastation since 2007. In that sense, today's figures are not that impressive, but one can only hope they're indicating better days ahead. Phil Izzo of the WSJ provided reaction to today's figures from a number of economi...

ABC News reports, Pension Fund Approached on Potash Bid : The head of a major Canadian pension fund says a Chinese sovereign wealth fund is interested in making a joint-bid with a Canadian pension fund for fertilizer-maker Potash Corp. of Saskatchewan Inc. Leo de Bever, chief executive of Alberta Investment Management Corp., which manages $70 billion Canadian (US$65 billion) in public sector pension funds, said Thursday his fund and other major pension funds in Canada have been approached by an intermediary looking to put together a rival bid to BHP Billiton's $39 billion hostile offer. De Bever said in an interview on Thursday that he's not interested. Australia's BHP Billiton Ltd., the world's biggest mining company, launched a hostile $130-a-share takeover on Aug. 18 after Potash directors rejected its offer. It seems that AIMCo wasn't the only one approached to make a rival bid. CBC reports that PotashCorp takeover bid to get review : Saskatchewan E...

It was a hot and beautiful day in Montreal. I met up with my former supervisor at the Caisse, Mario Therrien, who last year was appointed Senior Vice-President, Fund Management, with the Private Equity group. It had been almost seven years since I last saw him, and I was glad to hook up with him again to talk markets, alpha, hedge funds and private equity. Mario is a smart guy who reads a lot on markets and politics. He understands alpha and he's very well connected with key players around the world. Talking markets with him is always fun. Mario also offered me one of the most exciting jobs I've ever had. I was responsible for a portfolio of directional hedge funds (L/S Equity, global macros and CTAs) and learned a lot conducting investment, operational and risk management due diligence. But what I truly loved was sitting down one on one with top hedge fund managers and picking the minds on everything from which sectors they're investing in, to where they think bond yields...