Whose responsibility was it to fund the pension effectively given the known payouts? Health care costs of course impact future liabilities because of their increase, but not the fixed amounts of retirement based on known salaries in dollars.
If someone has a balloon payment due in the future, and they don't fund properly for that eventuality...who is to blame when the balloon is due and they don't have the money?
I'm sorry am I on the right forum where it's assumed posters have at least a fricken clue about investing?
Why did corporate pension funds go from a 60 billion surplus in 2007 to a 400 million deficit in a year? The pension fund managers made bad bets on the stock market, or real estate, etc. You do know that pension fund managers don't just buy TIPS, right? They want to make a profit on the money they are playing with...that's how they get paid. Pension funds are mismanaged all the time, unfortunately. http://www.bluebluegrass.com/2010/08/31/pension-fund-mismanagement-continues/ It really isn't much different than when Reagan's crew were auctioning off our future by issuing so many 30 year bonds...or the LTCM. People playing with money that isn't really their own.
Okay, who were the customers entrusting to take care and manage the fund? Who had the obligation? Who had the balloon payment, the union workers, or the government?
I don't believe in fund managers creating "alpha" and mismanagement is not the question the question is of (universal) malfeasance by fund managers .
So you don't believe in something, fine by me. The reality though, is a contract was made for the employer to pay for retirement benefits as part of the agreement with each employee. The government was on the hook the moment they signed the deal assuming the employees kept their end of the bargain. It wouldn't matter if the deal was collectively bargained or not. A deal was made. An obligation in the future was created, and the fixed amount was known. If the amount of the obligation was not known at the time of the deal, then how could these projections of underfunded liabilities in pensions be known now? The government makes their scheduled payments into the fund, but where does, or what does that money "buy" in the form of investments for the future obligation? Does it sit in cash? Bonds? Stocks? Real Estate investment trusts, etc? Does the fund keep pace with inflation? How do the private pension funds lose nearly 500 billion dollars in value in a year? Why would a fund manager take on a fund knowing it was underfunded for the future liability? To make a buck for themselves off of the government...that's why. So fund managers managing a government pension fund are really government workers too, unless their compensation is tied to a portion of the profits of the fund. So we have greedy employees...remember, greed is good according to the Capitalists...and we have public servants...serving their own interest over the good of the people...and we have greedy fund managers. So why is the union, and only the union to blame? Underfunded pensions are everywhere, union or not, state, local, city and private industries. Seems to me if the same problem is almost everywhere, then to blame only the unions is flawed thinking...
Ford May Need to Put $4 Billion Into Pension, Spurring Aid Bid By Keith Naughton Feb. 6 (Bloomberg) -- Ford Motor Co. may have to contribute $4 billion to its pension plan after a 2008 shortfall, a cash drain that risks dragging the second-largest U.S. automaker closer to a federal bailout. The collapsing stock market left the fund with a $4.1 billion deficit for its projected obligations, after 2007âs $3 billion surplus, Ford said in its fourth-quarter financial results. That may force an infusion of money starting next year, according to the viability plan filed with Congress in December. http://www.blueovalforums.com/forum...-put-4-billion-into-pension-spurring-aid-bid/