Additionally, I thought the pen funds became self(?)funded during the tech boom, having good returns because of the booming market cos did not have to make additional contributions, hence when that bubble went so did the pen funds and now that cannot make up the short falls.
Most funds are limited to relatively smallish amounts in stocks. What if a fund manager had said in March of 2000, "let's load up on CMGI". Because of that charters have strict limits on speculative equity holdings.
So it is motivated by greed really.These funds can't make an assumption of 8% a year because rates were generally higher in the 70s to 90s.Things change.In 1998 I bought a 2 year bond in the UK and got a 12% annual return for that time period.I can't do that now.If pension funds need to take on large risk to make those returns then it is a flawed business model and they are as much to blame for this mess as anyone. And all so some oldies can go to Cracker Barrel
One only needs several hundred calories a day to survive but I wouldn't call the yearning for a couple of full squares "greed"..... By the same logic if you take out a loan-say a mortgage-you make an assumption you'll remain employed. If you wind up in default I wouldn't say "greed" was necessarily your motive for entering the housing market. None of these acts are akin to a trader or manager in a partnership or publicly traded company who knows they have a free bonus call on windfall profits and then take excessive, imprudent risk.
OK,so if the chain goes thus >pension funds are chasing a return that low risk investment just won't cover and it would be unreasonable to just ask the senior citizens to put an extra jumper on when it's cold >they in turn call on the expertise of some hedge funds who are trading recklessly,unregulated and couldn't care less who gets hung out to dry just as long as they hit their targets>financial armageddon ensues and pension funds probably got burnt quite badly. What I'm saying is that 8% is high and people have to cut their cloth accordingly,if there is a period of low yield then it is a shame if people have to cut back and go to WalMart but I really don't think that even in this day and age a low risk investment would not generate enough money for retired people to eat. Also you'd be surprised how many people entered the housing market based purely on greed,not wanting to miss the boat,jumping in front of their fellow man and driving first-time buyers out of the market and eventually the USA into oblivion.