PBGC - Pension Benefit Guaranty Deficit Update
Feb 23, 2005 We Nattered and Warned:
Pay no heed to the man behind the curtain.....and so much for the gold watch.
With all the discussion over the fundless government IOU "Social Security" system, nobody is even talking about the pension plan scandal.
Since the stock market bubble popped in 2000, most pension plans are severely underfunded.
SEVEN MONTHS LATER... Sept 24, 2005 Amongst other things... We predict a PBGC bailout....
The Federal government will be spending huge amounts of money (that they do not have) on the...
PBGC pension plan bailout, IRAQI war and a myriad of programs to stem the tide on our shrinking jobs base.
THREE YEARS LATER... Feb 26, 2008 We Nattered and Jim Jubak noted:
Reducing fixed income from 72% by increasing stocks from 28 to 45% of the portfolio; and committing another 10% to alternative investments (hedge funds).
In other words, facing a $14 billion deficit and even larger projected shortfalls,
the PBGC decided not to save (by raising premiums) or to live within its means (by cutting benefits) but to gamble in the financial markets by taking on more risk.
NINE MONTHS LATER... Oct 24th, 2008
The federal agency that insures the pensions of millions of Americans lost more than $5 billion on investments over the past year.
The PBGC, which backs the private pensions of almost 44 million Americans, told the House Committee on Education and Labor...
it had almost $4.8 billion in losses tied to stocks and $678 million in fixed-income assets.
The investments lost almost 7% of their value, with the equity portion of the portfolio down 23%, the agency said.
The agency has come under fire for adopting this year a more aggressive investment strategy, boosting the share of assets in stocks to 45% from 28%, the most since 1990.
The agency said it plans to devote an additional 10 percent to private equity and real estate investments. The PBGC has $66 billion in assets.
Millard defended the plan, saying it would eventually generate higher returns to help the agency reduce a budget deficit that now totals $11 billion.
He said this year's losses are largely due to the old investment plan, saying the agency has only begun to implement the new strategy.
FOUR MONTHS LATER Feb 6, 2009...
The PBGC estimated that there was a collective pension shortfall of $47 billion at companies with debt ratings below investment grade, a group that includes Ford and GM.
Among the 1,500 largest U.S. companies, pension-plan deficits ended 2008 at a record $409 billion, up from a $60 billion surplus a year earlier.
ADD TWO AND TWO...The Nattering One muses...
lets see now, do the math... Director Millard take equities from 28% to 45% in one of the worst years ever ending Oct 08.
You just lost 7% or $5 billion and have $66 billion left over; but NO; Millard defends the choice and...
plans to add an ADDITIONAL 10% to private equity and REAL ESTATE??? WTF???
I can't wait to see the documents this October, when in order:
1. PBGC reveals that they have lost another 30% or $20 billion more with the aggressive portfolio;
2. the automaker & financial pension shortfalls bury them with another $40 billion in deficit pension plans;
3. the shorfall on investment income and insurance premiums to help finance its operations makes last years $11 billion deficit look small;
4. add it up $20B portfolio + $40B additional pensions + $15B deficit = $75 billion; only $66 billion on hand end of Oct 08.
5. equals the PBGC will be insolvent and asks for a bailout, as we predicted FOUR YEARS AGO.
Who's next? How about the FDIC and the FHLB? We will save those horror stories for another sleep depravated night.
Pay no heed to the man behind the curtain.....and so much for the gold watch.
With all the discussion over the fundless government IOU "Social Security" system, nobody is even talking about the pension plan scandal.
Since the stock market bubble popped in 2000, most pension plans are severely underfunded.
SEVEN MONTHS LATER... Sept 24, 2005 Amongst other things... We predict a PBGC bailout....
The Federal government will be spending huge amounts of money (that they do not have) on the...
PBGC pension plan bailout, IRAQI war and a myriad of programs to stem the tide on our shrinking jobs base.
THREE YEARS LATER... Feb 26, 2008 We Nattered and Jim Jubak noted:
Reducing fixed income from 72% by increasing stocks from 28 to 45% of the portfolio; and committing another 10% to alternative investments (hedge funds).
In other words, facing a $14 billion deficit and even larger projected shortfalls,
the PBGC decided not to save (by raising premiums) or to live within its means (by cutting benefits) but to gamble in the financial markets by taking on more risk.
NINE MONTHS LATER... Oct 24th, 2008
The federal agency that insures the pensions of millions of Americans lost more than $5 billion on investments over the past year.
The PBGC, which backs the private pensions of almost 44 million Americans, told the House Committee on Education and Labor...
it had almost $4.8 billion in losses tied to stocks and $678 million in fixed-income assets.
The investments lost almost 7% of their value, with the equity portion of the portfolio down 23%, the agency said.
The agency has come under fire for adopting this year a more aggressive investment strategy, boosting the share of assets in stocks to 45% from 28%, the most since 1990.
The agency said it plans to devote an additional 10 percent to private equity and real estate investments. The PBGC has $66 billion in assets.
Millard defended the plan, saying it would eventually generate higher returns to help the agency reduce a budget deficit that now totals $11 billion.
He said this year's losses are largely due to the old investment plan, saying the agency has only begun to implement the new strategy.
FOUR MONTHS LATER Feb 6, 2009...
The PBGC estimated that there was a collective pension shortfall of $47 billion at companies with debt ratings below investment grade, a group that includes Ford and GM.
Among the 1,500 largest U.S. companies, pension-plan deficits ended 2008 at a record $409 billion, up from a $60 billion surplus a year earlier.
ADD TWO AND TWO...The Nattering One muses...
lets see now, do the math... Director Millard take equities from 28% to 45% in one of the worst years ever ending Oct 08.
You just lost 7% or $5 billion and have $66 billion left over; but NO; Millard defends the choice and...
plans to add an ADDITIONAL 10% to private equity and REAL ESTATE??? WTF???
I can't wait to see the documents this October, when in order:
1. PBGC reveals that they have lost another 30% or $20 billion more with the aggressive portfolio;
2. the automaker & financial pension shortfalls bury them with another $40 billion in deficit pension plans;
3. the shorfall on investment income and insurance premiums to help finance its operations makes last years $11 billion deficit look small;
4. add it up $20B portfolio + $40B additional pensions + $15B deficit = $75 billion; only $66 billion on hand end of Oct 08.
5. equals the PBGC will be insolvent and asks for a bailout, as we predicted FOUR YEARS AGO.
Who's next? How about the FDIC and the FHLB? We will save those horror stories for another sleep depravated night.
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