Posted on 03/30/2009 2:40:21 PM PDT by Lorianne
WASHINGTON - Just months before the start of last year's stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.
Switching from a heavy reliance on bonds, the Pension Benefit Guaranty Corporation decided to pour billions of dollars into speculative investments such as stocks in emerging foreign markets, real estate, and private equity funds.
The agency refused to say how much of the new investment strategy has been implemented or how the fund has fared during the downturn. The agency would only say that its fund was down 6.5 percent - and all of its stock-related investments were down 23 percent - as of last Sept. 30, the end of its fiscal year. But that was before most of the recent stock market decline and just before the investment switch was scheduled to begin in earnest.
No statistics on the fund's subsequent performance were released.
Nonetheless, analysts expressed concern that large portions of the trust fund might have been lost at a time when many private pension plans are suffering major losses. The guarantee fund would be the only way to cover the plans if their companies go into bankruptcy.
(Excerpt) Read more at boston.com ...
Oh man, this is going to be a BIG magilla.
If they didn’t short obama’s catastrophe, they are even dumber than the average government worker.
I’m not a conspiracy theorist although I live for Doomer Porn, but I have to ask:
Are there people in power who are deliberately trying to bring down the economy, the country and the dollar?
This was a boneheaded move on its face, but nothing is clear anymore and the lies and obfuscation, not to mention the abject stupidity of our Overlords makes me wonder.
It may well be that our Overlords are abysmally stupid, drooling idiots put in power by other abysmally stupid, drooling idiots.
I admit to ignorance about the Pension Benefit Guaranty Corporation. What’s the implications of what they did and who represents the 44 million affected?
FRANNIE and Freddie taught us many lessons, but one really big one—quasi-government entities, not subject to market discipline, are a bad idea. The possibility of a General Motors bankruptcy turns our attention to the Pension Benefit Guaranty Corporation. The PBGC is an independent government agency that acts as insurer for private defined-benefit plan terminations.
Terminations generally result either from bankruptcy or severe financial distress. It's funded by the premiums collected from plan sponsors, assets recovered from plan takeovers, and investment income.
Plummeting asset returns plus turmoil-stricken automobile and airline industries is a recipe for disaster. Jeffrey Brown reckons the PBGC is currently $14 billion short of the cash it will need to cover pension obligations. In ten years the shortfall could be as much as $100 billion. There is some good news; GM claims its combined plan is currently over-funded and not in danger of being turned over to the PBGC (assuming the firm does not go bankrupt).
PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974. It currently protects the pensions of nearly 44 million American workers and retirees in more than 29,000 private single-employer and multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the companies formerly responsible for the plans.
PBGC operates under the guidance of its Board of Directors, which consists of the Secretaries of Labor (Chair), Commerce and the Treasury.
Vincent K. Snowbarger is the acting Director of PBGC. He also serves as Deputy Director for Operations. A former Member of Congress from Kansas, Mr. Snowbarger represented the Third District from 1997 until 1999. He held assignments on three House Committees: Banking & Financial Services; Government Reform & Oversight; and Small Business.
Prior to his federal service, Mr. Snowbarger was a member of the Kansas House of Representatives for 12 years, and was elected by his colleagues in Topeka as Majority Leader for the last four years (1993-97).
Mr. Snowbarger has also enjoyed a successful career in the legal, academic and association management sectors. He has been an attorney in private practice, taught business law and insurance at Mid-America Nazarene University in Olathe, Kansas, and also served as Executive Director of the Kansas Association of American Educators.
Mr. Snowbarger received his undergraduate degree from Southern Nazarene University in Bethany, Oklahoma. He also holds an M.A. from the University of Illinois and a J.D. from the University of Kansas. He is a member of the Kansas bar. Mr. Snowbarger joined the corporation in July 2002.
The other directors can be found here.
Any company who goes into bankruptcy is more than likely to dump their retirement obligations into PBGC. There is a limit to the amount collected by the retiree from PBGC, and almost always less then originally anticipated.
I’m beginning to suspect sabatage of our economy by those who want to create enough strife, leading to wholesale takeover of the U.S. - without a shot being fired.
I want this question answered - who made the decision as what prompted the move.
Sure seems so. People behind the people in power, too.
Under a law that took effect last year, underfunded pension plans may be forced to limit lump-sum payments and suspend cost-of-living increases for retirees. In addition, some plans could be frozen, preventing current employees from earning credit for additional years on the job.
...
Watson Wyatt Worldwide, a consulting firm, estimated pension assets declined 26 percent in 2008. The firm also reported the 100 largest US pensions were just 79 percent funded in 2008, compared with 109 percent funded at the end of 2007. That means they have 79 cents set aside for every dollar owed to current and future retirees.
There's more at the link.
Last year when the investments were made, they would have been W's clowns.
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