Can most pension funds last?

Can most pension funds last?

by tonytran2015 (Melbourne, Australia).

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(Blog No.38).

When a pension fund with legislated rates of pay out operates in a negative interest environment, its fund is bound to be depleted.

You have to ask how can it have money to pay out at the legislated (high positive) rates. It can only do that if it is injected with government printed fiat money or if it has an ever-expanding number of subscribers (a type of Ponzi scheme).

The stop on payouts by Dallas police fire pension board is no surprise. It is only the tip of the iceberg.

In general, negative interest rates have revealed the unsustainability of many pension plans with legislated rates of payout.

References (augmented after 09 April 2017)

[1]. Dallas police fire pension board ends run, bank stops 154m withdrawals. http://www.dallasnews.com/news/dallas-city-hall/2016/12/08/dallas-police-fire-pension-board-ends-run-bank-stops-154m-withdrawals, 18 Dec 2016.
[2]. Wkchild, Warning: US ponzi-retirement-market in big trouble, protect with precious metals – SRSRocco Report by Steve St. Angelo, sentinelblog.com, https://sentinelblog.com/2017/03/30/warning-u-s-ponzi-retirement-market-in-big-trouble-protect-with-precious-metals/, 30 March 2017.
[3]. SRSRocco, Warning: US ponzi-retirement-market in big trouble, protect with precious metals – SRSRocco Report by Steve St. Angelo, Economy, Precious Metals, https://srsroccoreport.com/warning-u-s-ponzi-retirement-market-in-big-trouble-protect-with-precious-metals/, 28 Mar 2017.
[4]. The next crisis is the mother of all counter party risks part1, US issues, https://us-issues.com/2017/04/09/the-next-crisis-is-the-mother-of-all-counter-party-risks-part-1/, 09 April 2017.

Augmented after 2017 June 11:

[5]. https://us-issues.com/2017/06/11/how-gold-can-rescue-pensions/.

[6]. https://news.sky.com/story/revealed-carillion-collapsed-with-5bn-of-financial-liabilities-11213303

[7]. https://straightlinelogic.com/2018/01/20/another-ponzi-exposed-as-long-term-care-insurers-double-premiums-to-stave-off-losses-by-tyler-durden/

[8]. http://us-issues.com/2018/02/05/illinois-debt-crisis-foreshadows-americas-financial-future/

[9]. https://www.msn.com/en-us/money/retirement/an-obscure-court-decision-against-a-rhode-island-towns-police-officers-and-firefighters-could-be-a-warning-sign-for-social-security/ar-BBIQf5o?li=BBnb7Kz

[10]. https://straightlinelogic.com/2018/04/21/the-war-between-public-pensioners-and-tax-donkeys-is-heating-up-by-charles-hugh-smith/

[11]. https://www.oftwominds.com/blogapr18/pensioners-tax-donkeys4-18.html

[12]. https://www.silver-phoenix500.com/article/social-security-deterioration

Added after 2018 July 07:

[13]. https://www.armstrongeconomics.com/international-news/britain/collapse-of-socialism-end-of-pensions/

[14]. http://www.wirepoints.com/illinois-state-pensions-overpromised-not-underfunded-wirepoints-special-report/

[15]. https://www.silver-phoenix500.com/article/another-way-looking-pension-crisis-%E2%80%9C-stealth-mortgage-your-house%E2%80%9D

[16]. https://us-issues.com/2018/08/13/bankruptcy-soars-as-the-country-grapples-with-an-unprecedented-debt-problem/

[17]. https://straightlinelogic.com/2018/10/08/with-corruption-like-this-its-no-wonder-so-many-pension-funds-are-insolvent-by-simon-black/

[18]. https://mobile.abc.net.au/news/2018-11-14/superannuation-rosy-picture-not-full-story/10495692

[19]. https://us-issues.com/2019/01/20/pension-fund-problem-just-got-much-worse/

[20]. Why some Japanese pensioners want to go to jail, https://www.bbc.com/news/stories-47033704

[21]. https://nationandstate.com/2020/04/28/why-illinois-is-broke-109881-public-employees-with-100000-paychecks-cost-taxpayers-14b/

 

 
Our auditors discovered 110,000 public employees and retirees who earned more than $100,000 last year.
We found tree trimmers in Chicago making $106,663; nurses at state corrections earning up to $277,100; junior college presidents making $491,095; university doctors earning up to $2 million; and 111 small town managers who out-earned every governor of the 50 states ($202,000).

Illinois Governor J.B. Pritzker wants to hike the income tax during a recession. The proposal would change the state constitution to allow for a progressive income tax…

Last week, Illinois State Senate President Don Harmon wrote a letter to Congress asking for a $40 billion bailout. $10 billion in bailout would be used for pension plan solvency.

This week, U.S. Senate Leader Mitch McConnell suggested another path, “I would certainly be in favor of allowing states to use the
bankruptcy route.” McConnell specifically mentioned Illinois along with Connecticut, California, and New York.

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