This Can't End Well
DOUBLE DOWN!
The Illinois Teachers' Retirement System — the worst-funded major pension plan in the U.S. — is pumping more of its assets into higher-risk investments while using accounting methods that some pension experts say understate its funding shortfall.
Springfield-based TRS, the state's largest pension provider, plans to allocate about a third of its $37.8-billion portfolio to alternative investments such as private-equity and hedge funds, a four-month Crain's investigation of TRS holdings and practices finds. These unconventional assets typically dangle the potential for higher returns, but only because they also carry greater risks and fees. TRS is shifting its portfolio while it's still developing an in-house risk-management system.
Gunning for bigger returns exposes the plan to the possibility of bigger losses, further jeopardizing the pensions of 362,121 former and current teachers. The system, which has just 46.5% of the assets it needs to cover promised payments to retirees, is counting on an 8.5% annual return, which many portfolio managers and investors, including Berkshire Hathaway Inc.'s Warren Buffett, say is unrealistically high. If TRS banked on a 7.75% return — the rate that two other Illinois public pensions lowered their forecasts to this year — its assets would equal only 43% of obligations. That would swell its shortfall to $50.1 billion from $43.5 billion.
Labels: pension
posted by SCC at 1:03 AM
29 Comments:
Today's issue of the Journal of the American Medical Association (JAMA) reports that police officers suffer sleep apnea and other sleep disorders more often than the general adult population. Untreated, it can and does decrease longevity.
I think they should put the rest of the cash on the 'Come' on the craps table. Or "always bet on black" like Wesley Snipes recommended in one of his many flops not-so-cleverly disguised as entertainment.
At least make it kinda interesting as you piss away the futures of thousands.
Maybe they hould hire Madigan and Cullerton as advisors to see if they can kill the pension off even sooner. Why these two bastards are not in jail is beyond me. Politicians in this state have destroyed our future to line their pockets.
I'd like to point out this little gem too.
http://finance.yahoo.com/news/older-baby-boomers-face-a-jobs-bust.html
There's a common mindset that people have with retirement planning.
They have their retirement age picked out maybe it's 55 or 65 or 68 or whatever, and they think that they will be able to work up until that age uninterrupted AND at the wage that they are making today -- adjusted higher for inflation of course as the years past.
Hey and why not?
You've kept up with your training. You're in good health. Hell being 70 today is more like 50 so why should you be turned away from a job that you're perfectly qualified, willing and able to do? You're motivated! Ha!
Well my friends don't count on it.
I don't care what your education and training and experiences are.
Just look at what corporate society is pulling on the boomers.
Many of them are at their PEAK earning years of around 50 years old and/or above and the corporations want nothing to do with them.
Why?
Because health care costs for one.
You'll hear from the corporations HR departments that the old guys are resistant to change, they don't have today's skills, they're slow and a lot of other nonsense to justify the ageism to the kids coming in from college so the kids can be exploited.
Let me tell you something.
One of the most common myths coming out of the politicians mouths is about going back to school to get retrained for today's skills.
There isn't any amount of training that is going to lower your age and make you attractive to a corporation under this environment.
I don't care what your major is or what your score on a math or science exam. You're 50...55..60 and that means your resume goes in the trash by the twenty-something HR clerk that thinks they're hot shit and you're the old guy that doesn't fit in.
Think it's a lie?
Look at the numbers in that link above.
Don't just look at the current numbers but look how the numbers are expanding at an exponential rate.
Their wages have been falling for the last ten years if they have a job at all and the number of unemployed are over 4 million now and growing.
With regards to YOUR pensions it means these old timers are pulling their money out of savings and investments to live on while the new kids are being pay chump change with no disposable income to invest. Think about that.
And if the age cut off for employment today is 50 and society finds it acceptable. What do you think they will drop it down to in the next few years? Corporations have a labor pool of over a billion people in India and another billion in China to choose from.
IMO we have an overcapacity of labor. We've gain a lot of efficiency over the industrial revolution and now the information revolution and we just don't need the bodies that we once did. In short the so-called best and brightest are either unwilling or unable to leverage the number of people that are out of work today and something else is needed to occupy these peoples times. There needs to be a new method of compensation and not welfare.
Otherwise it's chaos.
we are next, along with the firefighters.
The sooner the system is irreperably damaged the sooner we can have meaningful PENSION REFORM.
Nothing will get done while potential retirees still have hope.
The state of illinois is sorry that your pension was not funded for many years and raided by polititions for payback to campain supporters.
No one could have seen this coming......but now you must give up your silly dream of retirement.
Someone needs to file a lawsuit NOW. This is beyond irresponsible.
I'm telling you that the anger is turning into rage. You can book it!
Rahm may have saved $83 mil. on paper. How much damage do you think will be caused by the consequences of his actions before it's over?
Rahm's Clinic Closer CHASED OUT of the South Side
I would like to start a hedge fund that I can take all my fees up front and then get more money if I perform below the industry standard. Please post where I can apply for this.
Absolutely the wrong thing to do at this time. Chasing higher yield with hedge funds does not guarantee a higher rate of return. Hedge funds do not outperform basic index funds or investment grade corporate and government backed bond over time. This will end badly with a downturn of risk assets, (stocks). As risk assets move lower it forces the administrator to sell assets to meet obligations to current retirees. This is a recipe for disaster.
Now the police pension fund has an ever increasing number of members drawing on it as more active members with the age are choosing to retire rather than remain on this sinking ship that is the Chicago Police Department. Ladies and gentlemen, do you realize that the recent current moves to close Districts and Areas is an indirect way of forcing the police pension fund closer to insolvency? These closings aren't saving any money as the cost to move offsets savings. These recent events have all been orchestrated by the current corrupt mayor to force retirements, thereby increasing the retired pool, which in turn causes more drawdown of pension assets. Add in the lack of payment by the city of Chicago to the pension fund, along with non-hiring of new police officers to contribute to the pension fund and you can see the grand plan that was started by the corrupt ex-mayor Daley is being run full steam ahead by the current corrupt mayer Emanuel.
This strategy is an indirect way of forcing insolvency. In my opinion there is NO turning back now. Unfortunately, this is going to have much farther reaching implications to the police department than most realize at this time. There will be no reason to stay on this job other than the paycheck and even that won't be as compelling a reason for some.
1. FOP during the last 20 years or so - forgiving? the city's contribution to fund.
2. Consistent expansion of benefits - used to be 2% additional after 20- now 2.5%--- now suburban and deputies can "buy" in.
3. City not contributing the fair share.
4. Gold Braid pension
5. Pension fund board nonsense-- Vaneko nonsense.
6. Pension advisors-- buying CDO_CMBS etc
7. Contract time comes again and the concern will be about the chump change retro.
What would a reasonable person think the outcome would be?
you forgot this gem:
These new investments will be overseen partly by key TRS hedge funds — Stamford, Conn.-based K2 Advisors LLC and Grosvenor Capital Management L.P., a Chicago-based fund that aggregates hedge funds. Grosvenor is led by Michael Sacks, who was appointed vice-chairman of corporate recruiter World Business Chicago by Chicago Mayor Rahm Emanuel. Grosvenor and K2 decline to comment.
JAMA said...
Today's issue of the Journal of the American Medical Association (JAMA) reports that police officers suffer sleep apnea and other sleep disorders more often than the general adult population. Untreated, it can and does decrease longevity.
12/21/2011 01:09:00 AM
The Civic Federation likes this.
Can some one please explain to me where the first pensioneer got his money from?
What I am getting at is there wasn't always a pension. But someone started collecting it.
Our 9% we put in, is a drag on our households, but it is not enough to support us in our old age. But the City is no longer (and probably never again will) match.
It is my theory that the City will never put another dime in and just let it go broke. They will then throw their hands in the air and say "Gosh, no one saw that coming. So sorry."
At some point we will need them to re-fund it or we will be eating cat food in our old age.
time to leave got to get my money fuck the city
12/21/2011 04:04:00 AM
Great read thanks!! I am going to copy it and send it in emails!
When you are in a hole STOP DIGGING!
The politicians don't see this as a problem. They're trying to convince the public that the TEACHERS are the problem.!
Lying,thieving bastards!
Former IBM employees have a website that goes into futher detail about getting fucked over. Once they hit 50 it is over and done with. Jobs have been outsourced to India even though many employees are willing to work 3 or 4 days a week just to keep the lights on. IBM has told me fuck you. In fact, IBM opened up a center in Dubuque, IA and is recruiting high school kids and paying 15 a hour. That is why they left the bldg in downtown chicago.
Take that pension fund to Las Vegas and put it all on 00 and let it ride.
the state pension funds and especially the teachers have all those "one day wonders", union officials and now private industry workers that do contracts for the school system getting into the pension, not to mention the politicians pals who slip in also.
Andy Shaw on the Better Government Association is having a ball with them. A few times a week he comes up with more scams on the teachers pension fund
I thought the state legislature just passed a bill for new hires last January that was going to help take care of our pension. It was a 30 tyear plan forcing the city to make the proper payments and if they didn't the state would keep the city's share of the revenue sharing with the state. Thats where I believe the problem lies, the mayor does not want to be legally mandated to make the property payments and unlike during Daleys era, the state now has a remedy for that by withholding the revenue sharing
Maybe they hould hire Madigan and Cullerton as advisors to see if they can kill the pension off even sooner. Why these two bastards are not in jail is beyond me. Politicians in this state have destroyed our future to line their pockets.
12/21/2011 03:18:00 AM
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Yeah they're pumping that propaganda about Madigan doing a settlement with Bank of America for those predatory loans.
We are all suppose to feel good about it because someone quoted in the press that they are happy.
Over 200,000 predatory loans nationwide with an estimated 15,000 of them in Chicago.
Any jail time for anyone?
Nope..
Let's see how the Broken Windows crime methodology works if we were to expand the plea bargain deals to the street crime.
Hey I don't admit or deny anything, here's your stuff back and let's forget about the whole thing and go on our way shall we. I'm sorry, I won't do THAT again...no I'll do it this way instead..ha..
The $380 million settlement to Bank of America is chump change. They figure that in as the cost of doing business and it was worth the gamble. No-one is doing any time. They're the protected class. Give 'em a bail out and another tax break!
Wages and jobs are going in the exact opposite direction than what you need to be able to pull off a pension or social security ponzi scheme.
You need a constant increase in the number of new ponzi's to pay the old ponzi's to keep it going.
It ain't happening.
The leaders are hoping that the stock market will turn around and save them. But how can it? The boomers in their peak earning years are being kicked out of the workforce.
The boomers are pulling money out of their savings, investments, IRA"s and 401K's to live on. So they are not going to be bidding stock and investment prices higher.
On the other end of the spectrum you have college kids with six figure student loans and they are getting shovel ready pay while being lectured by politicians like Rahm that they have the wrong skill set and therefore should take out another loan and learn how to become a welder for $14/hr.
That wage qualifies them for food stamps in many cases. So they can't even save for their own retirement let alone fund the boomers retirement.
I just don't see where the money is going to come from to push stock prices higher.
The only way you can do it is to have the Fed print more money and devalue the dollar via inflation which makes the number go higher and gives the appearance of making money but in reality you lose buying power instead.
I mean seriously..The boomers are getting a rude awaking. They were lectured over their entire careers to save and plan on retiring at 65~68. They are finding themselves out at 50..55
and the plan to shift to income interest bearing investments as they near retirement is turning out to be a disaster. They planned on 6, 7, 8 percent interest on their savings and look at the effects of the Fed's "quantitative easing" ...it's destroying them with 1%..2% return on investment.
I've heard the stories..Man my goal is to have $400,000 by 65. At 8% interest I'll be pulling in $32K a year and I won't even have to touch the principal. I'll be sitting pretty. I can live on that with everything else already paid off.
Heh..only problem is they're getting $8,000 or about 2% on that money and are being forced to pull out principal which is forcing them to return ...or try to return to the workforce to live.
Not a pretty sight.
Wages are still falling too. The wealth of this country is being extracted by the corporations. Unions are being demonized but is was those higher union wages that provided tax revenue for our schools, police, fire and infrastructure.
Meanwhile as the wages fall the savings from them to the corporations are considered off limits by the corrupt politicians handing out tax breaks for campaign contributions.
ALL these incumbents need to be shown the door.
Isn't the pension akin to the Ponzi scheme? Those of us currently working are paying for those retired. The people who came on before us will pay for us. Simplistic as it may sound,can someone explain the difference, other than the City not putting in their fair share and/or not investing wisely?
Go fuck your city, go fuck this job and go double fuck this state. Can't wait for 12/12/12!
http://firstresponderpensionfacts.com/
Keep up to date on pension legislation
06:54 Your 100% right on retirement income. I'm retired and had a 5%, 3 year CD from the credit union that comes due in a few months. Even with the 1/2% for direct deposit and 1/2% for over 55 I will be lucky to get 1.20% cutting my interest by 75%. Theres no good and safe place to invest savings anymore
.....and something else is needed to occupy these peoples times. There needs to be a new method of compensation and not welfare.
Otherwise it's chaos.
12/21/2011 04:04:00 AM
i am currently recruiting......
Chalkie
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