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The Suddenly Poor Life: Millions Will Lose Their Pensions

Irons

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If you work for a company that has a pension promise watch for a push from the company to retire people early and even offer pension sign ups for workers who may not have qualified for it before.
They will try to get as much liability as possible under the pension umbrella right before they pull the rug out from under everybody. They call it controlling/capping/reinvesting etc legacy costs. YOU are a liability and a legacy cost.

This is exactly what GM did before deleting the value of their stock and bankrupting millions of pensioners.


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GOLDBRIX

God,Donald Trump,most in GIM2 I Trust. OTHERS-meh
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If you work for a company that has a pension promise watch for a push from the company to retire people early and even offer pension sign ups for workers who may not have qualified for it before.
The Mrs.'s work had a pension plan for decades. About three years ago the employees were told the company was abandoning the pension plan and moving to 401k plans. Those that were invested in the old pension plan would be given a dollar for dollar payout of their funds.
The Mrs. is younger than me and she does not understand or want to learn about finances. Since I had taken a hit in my self-directed retirement funds I suggested we shop around and find her a "No-Fees" finance manager ( They get a commission when the account makes money).

So with us male ol' goats usually "cash out" before our Mrs I am out of the picture except when she asks me to review it ( which I think is not often enough). Her account made some money under B.O. but since Trump got elected her account is going much better.

She has her 401k at work that gets some matching funds and she's got her rolled over pension IRA. So two to make one income ( and the her SSA if there is anything left)

Until the SHTF I rest easy knowing she is fairly well set-up when I go room temperature.

Anybody with a pension that is going "Tits Up" roll it over when given the opportunity.
Do not cash it out into your hands it become taxable.
FWIW
 

Irons

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Cash out and take the hit now or take it later, you ain't getting out of it.
And if you don't hold it you don't own it! . . o_O


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Thecrensh

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Cash out and take the hit now or take it later, you ain't getting out of it.
And if you don't hold it you don't own it! . . o_O


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I just read that China is seriously thinking about NOT purchasing US Treasuries anymore...when they stop, who is going to finance the Federal Gov deficit (not Debt) every year? That's right...the IRAs of all the producers.
 

Ensoniq

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itsamess

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If you work for a company that has a pension promise watch for a push from the company to retire people early and even offer pension sign ups for workers who may not have qualified for it before.
They will try to get as much liability as possible under the pension umbrella right before they pull the rug out from under everybody. They call it controlling/capping/reinvesting etc legacy costs. YOU are a liability and a legacy cost.

This is exactly what GM did before deleting the value of their stock and bankrupting millions of pensioners.


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Not only pensioners but all GM stock holders thanks to Ohole from the Shithole country. Then to make matters worse they reissue new stock but not for you Charlie Brown. Of all the hits to the portfolio that one still stings the most not as the largest but as the seared in memory of what can happen virtually overnight to a company that had a track record of decades of dividends. If I outlive the Ohole, I will celebrate his departure that's for sure.
 

searcher

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Lawsuit Against Blackstone, KKR/Prisma, PAAMCO, Kentucky Retirement System, and Others Has Major Implications for Public Pension Funds

Posted on January 17, 2018 by Yves Smith

A case filed at the end of last year, Mayberry v. KKR, hasn’t gotten the attention it warrants. The suit, which we’ve embedded at the end of this post, was filed on behalf of the beneficiaries of Kentucky Retirement Systems (KRS), the state’s public pension fund and its taxpayers, against Blackstone, KKR/Prisma, and PAAMCO for engaging in a civil conspiracy and violating its fiduciary duties under Kentucky law by misrepresenting what it calls “Black Box” hedge fund products. One of the eight plaintiffs is a sitting district court judge.

In addition to suing the top executives at these funds, including Henry Kravis and George Roberts of KKR and Steve Schwarzamn of Blackstone, the filing also targets four former and three current KRS board members, four former KRS administrators for breach of fiduciary duties, along with KRS’ fiduciary counsel, several financial advisers, its actuarial adviser, and a firm that certified its Comprehensive Annual Financial Report.

The fund managers allegedly focused on KRS and other desperate and clueless public pension funds who were unsuitable investors, particularly at the risk levels they were taking. KRS made what was a huge investment for a pension fund of its size. $1.2 billion across three funds all at once, in 2011, roughly 10% of its total assets at the time. They all had troublingly cute names. The KKR/Prisma funds was “Daniel Boone,” the Blackstone fund was “Henry Clay” and the PAAMCO fund, “Colonels”.

In the case of KKR/Prisma, the fund had installed an employee at KRS as well as having a KKR/Prisma executive sitting as a non-voting member of the KRS board. The filing argues that that contributed to KRS investing an additional $300 million into the worst performing hedge fund even as it was exiting other hedge funds. 1

The suit seeks damages for losses, recovery of fees paid to the hedge funds and other advisers, and punitive damages. The damages would go to KRS and the suit also asks that the court appoint a special monitor to make sure the funds are invested properly.

Some observers may be inclined to see this litigation as having only narrow implications, since KRS is fabulously underfunded, at a mere 13.6% funding level with only $1.9 billion in assets, and famously corrupt. KRS not only saw its executive director and chief investment officer fired over a 2009 pay to play scandal, but more recently, it had the astonishing spectacle of having the governor call in state troopers to prevent the KRS chairman, Tommy Elliot, from being seated. 2

Charming, no? But with so much bad conduct out in the open, it’s not hard to see why analysts might assume that Kentucky is so sordid that a suit there, even if it proves to be highly entertaining, is relevant only to Kentucky.

That may prove to be a mistake. As one former public pension trustee said,

This is the equivalent of going from a confrontation between the public pension industry and some people throwing rocks to a confrontation against the Soviet Army. Bill Lerach, the guy behind this is as serious as they come. Don’t let the fact that he was disbarred in any way fool you.

Lerach’s wife is a Kentucky native and one of the lawyers representing KRS. Her husband’s firm, Pensions Forensics, is an advisor to this case.

Lerach has a net worth estimated at $900 million, which is plenty of firepower to fund expenses on a case like this. Two different readers in Kentucky (neither of them Chris Tobe) separately informed me that the Kentucky attorneys pleading the case are formidable. As one said by e-mail:

Anne Oldfather is a local lawyer with a fearsome reputation and not to be taken lightly and not prone to settlement of any cases.

The case has also been assigned to the most progressive judge in the state.

The stakes for the defendants are high. The giant fund managers do not want to be found liable for misrepresenting their products, since a loss in this case would expose them to many other suits. But the plaintiffs appear not inclined to settle, plus a settlement with a state entity may not be secret (they aren’t in California). That would reduce the defendants’ incentive to agree to anything bigger than what they could argue was a token payoff

But as we discuss below, this case also has serious implications for pension trustees and advisers all over the US.

The filing makes persuasive arguments about how all-too-common practices, like the overstatement of expected returns, which in turn leads pension actuaries, trustees, and legislatures to seek too little in the way of current contributions, is a breach of fiduciary duty. If the court were to rule in favor of the plaintiffs on the overstatement argument, it would send a shock wave across the pension world. Many supposedly well-run public pension funds like CalPERS engage the behaviors that this case credibly depicts as violations of fiduciary duty.

The legal team on this case would like to conduct a Sherman’s march through the many parties that have sat pat or benefitted from public pension fund grifting. From Bloomberg:

Plaintiff attorney Michelle Ciccarelli Lerach said her law firm and three others behind the suit believe it could open a new path for state and municipal pension systems to seek compensation from managers of other alternative assets. Kentucky state law, she said, provides considerably more latitude than federal securities law to hold “control persons” personally liable for the actions of the entities they supervise… “And, as we’ve alleged in the complaint, each of the managers, actuaries and pension advisers owes a fiduciary duty under Kentucky law. It’s not a stretch to say they’ve breached it.”

The case is very readable, although it has some sour notes, like trying to depict Blackstone’s Steve Schwarzman, who left Lehman in 1985, as somehow being responsible for the firm’s collapse.

First we’ll discuss the case against the fund managers, then against the trustees and other insiders.

How Blackstone, KKR/Prisma, and PAAMCO Picked the Pockets of a Clueless and Desperate Pension Fund

The filing makes arguments that will sound all too familiar to anyone who has been watching the public pension fund world. KRS was overfunded at the peak of the dot com era, took a whack in the bust, and took an even bigger hit during the financial crisis. The case contends that KRS’s current effectively bankrupt state wasn’t a foregone conclusion, since many public pension funds are over 80% funded.

As we discuss in more detail below, the filing describes the desperate state of KRS and how the “Black Box” hedge fund sellers appear to have taken advantage of KRS’ sorry situation. The filing stresses the opaqueness of the investments, which were hedge funds of funds, and does not weigh as heavily as it might upon the fact that KRS was paying a layer of extra fees when the size of its investment was so large, over $400 million per fund, that it could have gotten adequate diversification without hiring pricey middlemen. The filing does argue that hedge fund investments have been a lousy bet, as we reported in the very first post on this site, in 2006.

The plaintiffs have not yet obtained the return data from the three funds at issue. But the reported “absolute return” strategy over the period, which the plaintiffs believe consists primarily, and likely entirely, of their total results, was under 4% per annum for the five fiscal years ended June 2016 versus an average annual return of 11.9% for the S&P 500 over that time period. One might argue that an absolute return strategy, being somewhat contra-cyclical, could be expected to do less well than the S&P 500. But that does not appear to be what KRS was led to expect.

The filing depicts Prisma as having preyed upon KRS as unsophisticated and needy and as misrepresenting its “Daniel Boone” fund as high return and low risk. One of the most telling parts of the filing is where it contrasts how the funds were described to KRS as opposed to in SEC registered filings.

This bit is also ugly:

As the Daniel Boone Fund began to lose millions in 2015-2016, KKR/Prisma, Roberts, Kravis, Reddy and Cook helped to arrange for a KKR/Prisma Executive to work inside KRS while still being paid by KKR/Prisma. Reddy and KKR/Prisma referred to this arrangement as a “partnership.” Subsequently, while Cook and Peden and the KKR/Prisma executive were working inside KRS, KKR/Prisma sold $300 million more in Black Box vehicles to KRS despite that KRS was then selling off over $800 million in other hedge funds because of poor performance, losses, and excessive fees and the KKR/Prisma Black Box was the worst performing of the three. This very large sale to KRS was a significant benefit to KKR/Prisma, which was then suffering outflows due to customer dissatisfaction over poor results and excessive fees.

One of the key questions is how the big fund defendants will respond in court. The usual approach is to say that the parties who lost out were sophisticated investors and that anyone who invests knows that nothing is guaranteed. Moreover, if the hedge funds agreements resemble private equity agreements, they may include language that is tantamount to a waiver of fiduciary duty. To my knowledge, no one has tested whether these provisions are enforceable; I can think of reasons (the staff and trustees cannot legally waive those duties; the provisions are contrary to public policy and hence not enforceable) why they might not survive a legal challenge.

In addition, fiduciary duty imposes a high standard of conduct, and at least so far, the defendants don’t appear to be trying to duck that. From Bloomberg:

“We take our fiduciary duty very seriously and believe that the allegations about our firm are meritless, misplaced and misleading,” Cara Major, a spokeswoman for KKR, said in an email.

How KRS Trustees, Administrators, and Hired Guns Sold Out the Fund Beneficiaries and Kentucky Taxpayers

Significant parts of the case discuss how the parties duty-bound to serve the welfare of the beneficiaries and the state instead put their own financial and/or reputational interests first. For instance, the filing states:

After these losses, the trustees4 received studies which revealed that the financial condition and liquidity of the Funds were seriously threatened and far worse than was publicly known. The trustees had been utilizing outmoded, unrealistic and even false actuarial estimates and assumptions about the Pension Plans’ key demographics, i.e., retiree rates, longevity, new hires, wage increases, inflation. For example, Trustees used an assumed 4.5% yearly governmental payroll growth when new hiring rates were near zero or negative and interest rates were too. Most importantly, KRS’ assumed annual rate of investment return (“AARIR”) of 7.75% was not realistic.5 Nevertheless, Trustees and other Defendants continued to use assumptions that were proven to be dead wrong by the actual figures established since 2000. From 2000 through to date, the Funds’ cumulative moving average annual rate of return has never even come close to that “assumption.”



It isn’t just that the trustees continued to use unrealistic return assumptions, as shown above. The fact that they also apparently had “false actuarial estimates” and stuck with rosy payroll growth assumptions makes this look like a continuing “kick the can down the road” exercise, that with the long time horizons of pension funds, the officials in charge could hide the problems, or somehow generate miraculous returns and earn their way out of their hole.

But as anyone who had managed professional traders knows, someone sitting on losses is particularly inclined to take “swing for the fences” risky bets or even engage in illegal activity to try to recover.

Enter what the filing calls the “Black Box” hedge fund sellers. It is remarkable that the trustees contemplated this type and scale of investment after the fund had been caught out in “pay to play” scandal involving its first investment in “exotic” alternative structures in 2009 that resulted in the firing of its Executive Director and Chief Investment Officer in 2009, a mere two years earlier.

The filing contend that by 2010, the trustees, administrators, and other advisers knew KRS was in a deep hole and were lying to the public about it:

All defendants also realized that if they honestly and in good faith factored in and disclosed realistic actuarial assumptions and estimates and investment returns, the admittedly underfunded status of the Plans would skyrocket by billions of dollars overnight, that there would be a huge public outcry, that their stewardship and services to the Funds would be vigorously criticized, and that they would likely be investigated, ousted, and held to account.

The reason this case is potentially so significant for other public pension funds isn’t simply that the fact set above serves as motive for investing in unduly risky products without asking tough questions, that the insiders were desperate for any way out even if they should have known that what they were buying was hopium. The filing makes a strong argument that the mere fact of misrepresenting the true condition of the fund was a violation of fiduciary duty and other state laws.

Other lines of argument that could apply to many other public pension funds include:

Inadequate fiduciary training of trustees. Fiduciary counsel Ice Miller is a named defendant in the suit for this lapse. Ice Miller is separately alleged to be responsible for the officers and trustees of KRS not having sufficient directors’ and officers’ insurance, which the filing argues should be $300 million as opposed to $5 million.

Misleading and incomplete disclosure of KRS’ financial condition in its Annual Report. The filing depicts this breach as a serious failing and holds many parties liable, including the trustees, the fiduciary counsel, financial advisers that supplied signed representations included in the financial reports, KRS’ actuary, and of course, its accounting firm.

One amusing tidbit is the inclusion of the “Annual Report Certifier,” the Government Finance Officers Association, as a defendant. Note that CalPERS makes much of the fact that the Government Finance Officers Association also certifies its reports. From the filing:

According to GFOA, it conducts a very thorough review of any pension trust or plan that applies for a Certificate of Achievement in financial reporting…

GFOA’s business model depended on selling a large volume of public pension funds memberships/certificates/endorsement and awards and thereby generating revenue…The larger the fund the larger the fee. GFOA also charges a size-based fee in return for issuing its Certificate and Achievement awards, in effect taking fees and dues in return for handing out prestigious sounding and looking awards and certificates but doing no real research or investigation, nor any skeptical, detailed, independent review or evaluation.

The case contends that the GFOA had incentives to continue to give KRS’ reports awards in the face of evidence that they were dodgy:

GFOA depends upon the monies it gets for issuing these certifications and advertisements to public pension plans. If it suddenly withdrew or refused to continue giving the annual awards and certification to KRS, that would have raised red flags, pension funds would have shied away from using GFOA which could have threatened GFOA’s volume-driven, hand-out-the-certifications-in return-for-the-money, business model. GFOA chose to continue its awards and false certifications to KRS in order to benefit its own economic self-interest.

Mind you, this is far from the most important allegation of corruption in this suit. But it serves to demonstrate how deep the rot is and how many parties profit from it.

As Lambert likes to say, pass the popcorn. If the plaintiffs in this suit are as bloody-minded as they appear to be, a lot of dirty practices will be exposed, and the perps will have a hard time maintaining their usual plausible deniability defenses. If we are lucky, this suit will force a long overdue day of reckoning in public pension land.

____

1 For the purpose of simplicity in this post, we refer to Blackstone and KKR/Prisma. In fact, all of KKR, Prisma, and PAAMCO are included among the defendants in this suit. It was Prisma that sold the hedge fund investment to KRS in 2011. KKR had been trying to buy Prisma bolster its hedge fund business since 2010 and acquired Prisma in 2012. Last year, KKR/Prisma merged with Pacific Alternative Asset Management to form PAAMCO/PRISMAHOLDINGS. The new entity manages the former KKR/Prisma hedge fund operations. The filing also spills some ink on the fact that convicted hedgie S. Donald Sussman had a substantial ownership stake in PAAMCO which it alleges, based on a 2010 New York Times story, that founder Jane Buchan and Sussman conspired to cover up:

Sussman had a background Buchan wanted to conceal from potential investors, customers and regulators, as he had been convicted of dishonest behavior in connection with the investment of fiduciary monies. Buchan and Sussman created fake documents to disguise Sussman’s large ownership stake in PAAMCO as a loan, because Buchan and the other founders believed they could hide Mr. Sussman’s background from investors and regulators.

2The fact that the state attorney general backed Elliot and Judge Philip Shepherd later excoriated the Governor doesn’t mean we have a “good guy, bad guy” situation at work. This is more like a beauty contest between Cinderella’s ugly sisters. Noting that “There is no way to prove or disprove dark money,” former KRS trustee and author of Kentucky Fried Pensions Chris Tobe opined by e-mail:

Tommy Elliott (and Tim Longmeyer who is now serving a 5 year prison term for kickbacks from the related state health plan) were the fundraisers for the Gov. Beshear administration. So basically they were getting the Blackstones and KKR to give to superpacs, ie, dark money, to elect Gov Beshear’s son as Attorney General.

I believe that Gov. Bevins’ forced police removal was a loud and clear signal for Wall Street to write kickback checks to his people instead of Tommy Elliottt.

https://www.scribd.com/document/367973905/Mayberry-v-KKR-KRS-lawsuit

https://www.nakedcapitalism.com/201...or-implications-for-public-pension-funds.html
 

searcher

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Across the pond.............

Global Pension Ponzi – Carillion Collapse One Of Many To Come



-- Published: Monday, 22 January 2018

Pension Crisis And Deficit of £2.6B At Carillion To Impact UK Pensions

– Carillion collapses leaving a £900 million debt pile and 30,000 pensions at risk
– Carillion PLC share price has collapsed 94% in last twelve months
– Private analysis of Carillion’s pension deficit reveals it to be as high as £2.6 billion
– Figure adds to the UK’s ongoing pension crisis, both private and state are severely underfunded
– UK’s Private Pension Fund already has a levy of £550 million for next twelve months
– UK state pension crisis as state fund to be ‘exhausted by 2033’
– Ensure your pension is funded and properly diversified with gold


Editor: Mark O’Byrne



Source: Wikimedia

The looming pension crisis has been signalled in the collapse of Carillion. The deficit of latest private sector dead-on-arrival Carillion is officially £580 million. However, private reports suggest it could be as high as £2.6 BILLION.

According to a Sky News investigation: ‘the £2.6 billion figure relates to the cost to Carillion of paying an insurance company to guarantee all of its pension liabilities, and is significant because it is likely to be the sum claimed on behalf of the pension schemes as part of the liquidation process.’

Nearly 30,000 UK workers’ pensions are at risk thanks to Carillion management’s total mismanagement of a company that has seen its share price collapse 94% in the last 12 months.

Carillion’s 27,500-member pension scheme was placed on an ‘at risk list’ in autumn 2017. Arguably, it like many other pension funds should have been there many months ago.

Sadly, Carillion is just the latest in a very long string of serious company collapses that have highlighted the major pension crisis in the UK and around the Western world. It also likely signals that we may be on the verge of many, many more very large corporate bankruptcies in the UK due to massive debt levels and unfunded liabilities.

This is not a situation unique to the private sector. It will be repeated in the years ahead – both in the public and the private sector.

In November 2017, the OECD warned that the UK’s defined benefit workplace pension plans (final salary schemes) as ‘persistently underfunded’ and the state pension as seriously lacking.

Everyone is exposed by this and it emphasises the importance of saving for retirement and ensuring your pension is both funded and properly diversified.

These ongoing disasters in the UK’s pension pots are also a threat to the efforts of prudent individuals who have worked hard to set aside enough for their hard-earned retirements.

Private Pension Fund Palaver

The UK’s Private Pension Fund estimates that it will cost around £900m to cover the costs of the Carillion pension schemes. The idea of the PPF is that it is funded by liquid private companies who offer private pensions, as a sort of insurance should a Carillion-esque disaster strike.

The PPF rescue of Carillion pensioners is not a full-blown well-equipped life boat rescue, it’s more of a rubber dinghy and a metallic blanket. The rescue fund will pay current Carillion pensioners lower cost-of-living increases than they have been used to, and slash the eventual payments of those who aren’t yet retired.

The Telegraph explains the current state of the PPF:

As of March 2017, the PPF had £28.7bn in invested assets, and cash reserves of £6.1bn. It has a funding ratio – the fund’s assets versus its liabilities – of 121pc. The PPF is the backstop for final salary schemes, which pay guaranteed, inflation-proofed pensions for life.

At the moment (without the Carillion liability) the levy from the PPF is £550m. With this new expense companies who have their own defined-benefit schemes (and therefore must pay into the fund) will see their reviews increase. What damage will this do to the wider economy? How sustainable is a fund that is designed purely to rescue unfunded and bankrupt pension funds?

Why, if you are having to effectively-bailout the pension schemes of your failed contemporaries? Are you at all incentivised to invest in your own company, put up wages or even increase pension contributions yourself? It’s not as though the PPF is filling its contributors with confidence that levies are going to go down any time soon.

The failure of Carillion is a stark reminder that more often than not institutional shareholders, management board members and (in this specific case) politicians act in their own interest, frequently short term, rather than stopping to think what the overall, long term impact of their actions will be.

Reports state that Carillion over 2015 and 2016, £162 million has paid dividends to shareholders, compared with just £94 million to address the pension deficit.

The UK’s pension crisis

Last year we brought you the news that a Pensions and Lifetime Savings Association report found that three million workers with final salary pensions have 50% chance of losing up to fifth of their income because their employers have made unaffordable promises.

We outlined:

The PLSA data finds the most vulnerable employers have a 50:50 chance of not having an insolvency event in the next 30 years:

“More than 11 million people rely on defined benefit pension schemes for some or all of their retirement income but there is a real possibility that without change we will see more high profile company failures such as BHS or Tata Steel.”

Former pensions minister Steve Webb told City A.M. that he agrees:

“It’s not enough money. It’s just brutally not enough money going in,”

Just this week FCA Chief Executive Andrew Bailey made a point of the dangers looming for retirees, in his annual Mansion House speech:

“There is a clear risk that the savings rate for retirement is for many people too low to meet their expectations of retirement.”

The Carillion debacle will just add to this drama. The Private Pension Fund will once again have to step in and cover the expenses of the company’s 13 pension schemes.

Of course, at the moment all of the headlines are all about Carillion’s pension disaster. But what about the hundreds of sub-contracting firms who have their own schemes to cover? And are no longer going to be paid?

The ripple effect of the downfall of this firm will be far and wide. Yet again the mismanagement by the few will end up having an effect on the many. The pension crisis disaster could leave multiple pension pots unfunded and thousands of people bankrupt.

Private pensions are not alone

Many Brits and Europeans have more than one pension and this includes the state pension. For those in the United Kingdom, this is sadly also under threat.

Back in December, we brought you news of a report from the OECD that found those Brits planning to rely solely on their state pension will be left ‘with few resources.’ So bad is the situation that the body felt the need to remind politicians of the importance of long-term planning over short-term policy gains.

Inevitably, it is the tax payer who ends up forking out for government mistakes when it comes to misspending. Earlier this month the Government Actuary Department (GAD) said the rate of National Insurance (the manner in which Brits contribute to state pensions) may have to increase by as much as 5% in order to maintain the stability of the state pension fund.

This is bad news for both worker and employer. Estimates suggest this increase could add an additional £120 and £138, respectively in contributions from each party.

Furthermore, the lack of money means more time is required to have enough for retirees, therefore there is a suggestion that the retirement age is increased once again. This would be a measure to avoid increasing taxes.

GAD warned:

‘There won’t be enough coming in from National Insurance to cover the cost of paying the state pension…

‘To stop that happening, NI contributions have to go up or the government will have to make changes to the state pension or the age it is paid from.’

However, even with this and recently announced changes to minimum pension contributions the Department of Work and Pensions estimate 38% of the UK workforce are under-saving for retirement.

So for those who are saving and working, this is no doubt yet another cost that will come back to bite you no matter how responsible you have been with your own pension pot.

When it comes to your pension, beware who you trust

It is vital that savers and investors begin to take responsibility for their own pensions and ask questions. Most importantly one must ask if you can hold gold as part of your pension.

Gold should be a key part of your pension portfolio. At the moment UK pensions are at threat not just because of Carillion-esque disasters or bad planning by governments, but indirectly due to likely being used to bail-out pension pot implosions. Gold cannot be taken by governments or banks looking to top up their coffers.

The economy shows that whilst stock and bond markets have done well in the short term, they are artificially overvalued. Once again this is with thanks to the easy monetary policies of central banks and governments. So whilst readers may think they are in well-funded pension pots, or have some level of protection, where is the real value coming from?

Gold will protect in coming pension crisis

This is where gold plays a key role.

Dr. Constantin Gurdgiev, formerly an adviser to GoldCore, says the following about the importance of having gold in your pension:

“Gold is a long-term risk management asset, not a speculative one.

As such it should be analysed and treated predominantly in the context of its role as a part of a properly structured, risk-balanced and diversified portfolio spanning the full life-cycle of the investment and pension horizon for individual investors and those with pensions.

Whether they be SIPPs in the UK or IRAs in the USA.”

Investors in the UK and Ireland, the US, the EU can invest in gold bullion in their pension, through self-administered pension funds.

UK investors can invest in gold bullion through their Self-Invested Personal Pensions (SIPPs), Irish investors can invest in gold in Small Self Administered Schemes (SSAS) and US investors can invest in gold in their Individual Retirement Accounts (IRAs).

The pension crisis is a multi-trillion pound crisis. It is not going to go away. Adding physical gold to your pension is a key way to protect your retirement from the pensions time bomb.

As is owning physical gold outside a pension fund and as a hedge and safe haven, store of value.

Pension funds, throughout the West, have a distinct lack of diversification when it comes to assets. This has cost pension holders a huge amount of money and places their future viability at risk.

Gold bullion has an important role to play over the long term in preserving and growing pension wealth. Read our guide about how to own gold in a pension (CGT free) in the UK here.

Recommended reading

UK Pensions Risk – Time to Rebalance and Allocate to Cash and Gold

Survey shows UK and US Pensions Crisis is Imminent

Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms

News and Commentary

Gold steady; U.S. govt shutdown worries investors (Reuters.com)

Stocks Mixed, Dollar Flat With Shutdown in Focus (Bloomberg.com)

Palladium flows from west to east to meet industry demand (Reuters.com)

METALS START THE WEEK ON A STRONG FOOTING (BullionDesk.com)

Gold steady, palladium looks set to stay on the boil (BusinessLive.co.za)


Source: Statista

Risk of US government shut down as US 10 year rises above 2.6% (MoneyWeek.com)

Property Bubbles In Australia, Canada; Flying Blind at 20X as China Chills (MouldinEconomics.com)

Why A Hard Brexit Could Be Inevitable (ZeroHedge.com)

Silver as a Strategic Metal and Why Prices Will Soar (SilverSeek.com)

Futures exchange operator details discounts for secret trading by central banks (CMEGroup.com)

Gold Prices (LBMA AM)

22 Jan: USD 1,334.15, GBP 959.12 & EUR 1,087.87 per ounce
19 Jan: USD 1,335.80, GBP 960.17 & EUR 1,087.74 per ounce
18 Jan: USD 1,329.75, GBP 961.14 & EUR 1,088.40 per ounce
17 Jan: USD 1,337.35, GBP 969.45 & EUR 1,092.48 per ounce
16 Jan: USD 1,334.95, GBP 970.38 & EUR 1,091.32 per ounce
15 Jan: USD 1,343.00, GBP 971.93 & EUR 1,092.93 per ounce

Silver Prices (LBMA)

22 Jan: USD 17.04, GBP 12.25 & EUR 13.90 per ounce
19 Jan: USD 17.04, GBP 12.27 & EUR 13.89 per ounce
18 Jan: USD 17.09, GBP 12.31 & EUR 13.96 per ounce
17 Jan: USD 17.21, GBP 12.49 & EUR 14.10 per ounce
16 Jan: USD 17.10, GBP 12.43 & EUR 13.99 per ounce
15 Jan: USD 17.12, GBP 12.58 & EUR 14.14 per ounce

https://news.goldcore.com/

http://news.goldseek.com/GoldSeek/1516626682.php
 

searcher

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Find The Sentence That Dooms Pension Funds (Don’t Worry, It’s Highlighted)

By: John Rubino



-- Published: Wednesday, 21 February 2018

The “pension crisis” is one of those things – like flying cars and nuclear fusion – that’s always coming but never arrives. But for pension funds reason it hasn’t yet happened is also the reason that it will happen, and soon:


The Risk Pension Funds Can’t Escape
(Wall Street Journal) – Public pension funds that lost hundreds of billions during the last financial crisis still face significant risk from one basic investment: stocks.

That vulnerability came into focus earlier this month as markets descended into correction territory for the first time since February 2016. The California Public Employees’ Retirement System, the largest public pension fund in the U.S., lost $18.5 billion in value over a 10-day trading period ended Feb. 9, according to figures provided by the system.

The sudden drop represented 5% of total assets held by the pension fund, which had roughly half of its portfolio in equities as of late 2017. It gained back $8.1 billion through last Friday as markets recovered.

“It looks like 2018 is likely to be more turbulent than what we have experienced the last couple of years,” the fund’s chief investment officer, Ted Eliopoulos, told his board last Monday at a public meeting.

Retirement systems that manage money for firefighters, police officers, teachers and other public workers are increasingly reliant on stocks for returns as the bull market nears its ninth year. By the end of 2017, equities had surged to an average 53.6% of public pension portfolios from 50.3% one year earlier, according to figures released earlier this month by the Wilshire Trust Universe Comparison Service.

Those average holdings were the highest on a percentage basis since 2010, according to the Wilshire Trust Universe Comparison Service data, and near the 54.6% average these funds held at the end of 2007.

One reason public pensions are so willing to bet on stocks is because of aggressive investment targets designed to fulfill mounting obligations to millions of government workers. The goal of most pension funds is to pay for those future benefits by earning 7% to 8% a year.

“Equities always take up a disproportionate share of the risk budget that any plan has,” said Wilshire Consulting President Andrew Junkin, who advises public pension funds. “You can never get away from it.”

That stance paid off during 2017’s market rally as public pensions had one of their best years of the past decade. They earned 12.4% in the 2017 fiscal year ended June 30, according to Wilshire Trust Universe Comparison Service.

But the risks are sizable losses during market downturns, which then can lead to deeper funding problems. The two largest public pensions in the U.S.—California Public Employees’ Retirement System, known by its abbreviation Calpers, and the California State Teachers’ Retirement System—lost nearly $100 billion in value during the fiscal year ended June 30, 2009. Nearly a decade later, neither fund has enough assets on hand to meet all future obligations to their workers and retirees.



Many funds burned by the 2008-2009 downturn tried to diversify their investment mix. They lowered their holdings of bonds as interest rates dropped and turned to real estate, commodities, hedge funds and private-equity holdings. These so-called alternative investments rose to 26% of holdings at about 150 of the biggest U.S. funds in 2016, according to the Public Plans Database, compared with 7% more than a decade earlier.

At the same time, the amount invested in stocks crept upward as markets roared back—and equities remain the single largest holding among all funds. The $209.1 billion New York State Common Retirement Fund increased its equity holdings to 58.1% as of Dec. 31 as compared with 56% as of June 30. That allocation is now higher than the 54% held as of March 31, 2008.

The $19.9 billion Teachers’ Retirement System of Kentucky now has 62% of its assets in equities, close to the 64% it had in 2007. It sold $303 million in stocks Jan. 19-20 to rebalance its portfolio following gains. From Feb. 6-8, as U.S. markets plunged, the fund bought another $103.5 million of stocks.

“We are definitely a long-term investor and look to volatility as an investing opportunity,” said Beau Barnes, the system’s deputy executive secretary and general counsel.

Calpers had a chance to pull back on stocks in December and decided against it. Directors considered a 34% allocation to equities, down from 50%. They also considered a higher allocation.

In the end, the fund opted to raise its equities target to 50% from 46% as of July 1 and its fixed-income target to 28% from 20%. It had 49.8% of its portfolio in equities as of Oct. 31, according to the fund’s website. That is close to the 51.6% it had in stocks for the fiscal year ended June 30, 2008.

To put the above in historical context:

Thirty or so years ago, state and local politicians and the leaders of their public employee unions had a shared epiphany: If they offered workers hyper-generous pensions they could buy labor peace without having to grant eye-popping and headline-grabbing wage increases. And if they made unrealistically high assumptions about the returns they could generate on pension plan assets they could keep required contributions nice and low, thus making both workers and taxpayers happy. The result: job security for politicians and union leaders and a false sense of affluence for workers and taxpayers.

This scam worked beautifully for as long as it needed to – which is to say until the architects of the over-generous benefits and unrealistic assumptions retired rich and happy.

But now the unworkable math is coming to light and pension funds are responding with two strategies:

1) Roll the dice by loading up on equities – the most volatile asset class available – along with “real estate, commodities, hedge funds and private-equity holdings.”

2) Buy the dips. As the above highlighted quote illustrates, stocks have been going up so steadily for so long that pension fund managers now see “volatility as an investing opportunity.” When the next downturn hits they’ll throw good money after bad, magnifying their losses.

Eventually a real bear market will shred the duct tape and chewing gum that’s holding the public pension machine together. And several trillion dollars of obligations will migrate from state and local governments to Washington, which is to say taxpayers in general, at a time when federal debts are already soaring.

http://news.goldseek.com/DollarCollapse/1519245224.php
 

GOLDBRIX

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Blame the CommieFornia FREE SH!T Society and Comrade Jerry Brown. :belly laugh:
 

Uglytruth

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But, but, but you promised! Turning libs into conservatives overnight..........

Now a nice lib would just say it's all right I like to share........ will illegals, rapeugees, feds................. this is gunna be good!
 

Uglytruth

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Does that mean more QE fiat is pumped into the system & markets go up?
Does that mean they don't get a bailout & they have to start selling off stocks and the market goes down?
Does that mean the retired will take a pension cut and curb spending?
Does that mean the taxpayers will bail them out then Il, then NY, then state after state bail on pensions and stopping the economy in it's tracks?
Does that mean anyone, anywhere will be held accountable?
Does that mean it's Trump's fault?
 

oldgaranddad

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That Calpers crap is a big deal.
They will come crying to us to " make it right "...
JMHO
I totally agree. This is the the beginning of another major crises like 2008 where Lehman Brothers and Bear Sterns (and my former employer American Home Mortgage) all fell over first. Calpers will be the tip of the iceberg. Other so-called solvent states, like NY where I live, will be outed as frauds using accounting tricks and one shot funding will be next. After that multiple insurance companies will start to teeter again like AIG did because they are insuring many of the investments the pension funds are holding. The question is how many layers will this crash through?

I find it ironic that in 10 years no one learned nothing from 2008 and only repeated the same stupid moves.
 

arminius

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Hey why try to stop this party from rockin and rollin like it's been doing. Jus a little hiccup in 2008, why stop the velocity and confidence game while it's really rocking.


If you believe you think you can do anything about it...
 
Last edited:

southfork

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Blame the CommieFornia FREE SH!T Society and Comrade Jerry Brown.

And blame the aholes that elected him again after he already made the state insolvent, WTF is wrong with the people in commiefornia
 

Uglytruth

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I find it ironic that in 10 years no one learned nothing from 2008 and only repeated the same stupid moves.
They learned they got bailed out. They learned no one got in trouble. They learned easy money was to be had. They learned ........... the people are saps........
 

oldgaranddad

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They learned they got bailed out. They learned no one got in trouble. They learned easy money was to be had. They learned ........... the people are saps........
You are so very correct!
 

Irons

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I totally agree. This is the the beginning of another major crises like 2008 where Lehman Brothers and Bear Sterns (and my former employer American Home Mortgage) all fell over first. Calpers will be the tip of the iceberg. Other so-called solvent states, like NY where I live, will be outed as frauds using accounting tricks and one shot funding will be next. After that multiple insurance companies will start to teeter again like AIG did because they are insuring many of the investments the pension funds are holding. The question is how many layers will this crash through?

I find it ironic that in 10 years no one learned nothing from 2008 and only repeated the same stupid moves.
Trump may choose to only bail out the red states, the states that are really in trouble are all demonrat run sanctuary city shitholes anyway.
California, new york, illinois etc will never vote republican so feck 'em. Just like he did with the tax bill that caps their federal property tax write off.

.
 

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What's a pension? Something that you rely on from others to give you money?

I've watched too many peeps back in the 70s and beyond get fucked (Libbey Owens Ford for a prime example) not only their jobs, but on their pensions.
 

arminius

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What's a pension? Something that you rely on from others to give you money?

I've watched too many peeps back in the 70s and beyond get fucked (Libbey Owens Ford for a prime example) not only their jobs, but on their pensions.
Exactly. I remember the deep mis-trust of corporations engendered by what we lived through in the 70s. I never sought any kind of industry with a pension after leaving almost two years at US Steel Southworks in the early 70s.
 

Buck

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I find it ironic that in 10 years no one learned nothing from 2008 and only repeated the same stupid moves.
They learned they got bailed out. They learned no one got in trouble. They learned easy money was to be had. They learned ........... the people are saps........
It's worse than that
They All Doubled Down while ignoring the issue
Increased Taxes to fix shit that isn't going to be fixed, the money will be routed to retirement funds, while none of the sheep are told

and this money that's re-routed isn't going to be anywhere near enough

Bail-In Time

but, can that be justified for local districts? or is that only reserved for a Fed failure?
 

edsl48

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They learned they got bailed out. They learned no one got in trouble. They learned easy money was to be had. They learned ........... the people are saps........
Isn't that the truth! It burned my a** when the PBGC thing was instituted to bail out pensions as if they, the pension funds, were paying into an insurance fund similar to the FDIC or FSLIC. Union plans with failed management practices by governing boards elected by the union members. Consider the current Teamsters plan that had a vote to reduce benefits in order to remain solvent for the future. That idea was swiftly voted down meaning a PBGC bailout is virtually assured in the not to distant future.
I have this feeling most of us here have or are taking financial measures for the retirement years that takes effort and requires sacrifices. Then, as always, we are taxed in one way or another to pay for those that have not made any efforts on their own. ( I better stop now because I am ready to rant :X )
 

Buck

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I have this feeling most of us here...
me:don't know:
i have the feeling most of us here...

are more prepared for what the future holds, than the planners of what the future holds, are:dog:

i'm amongst friends
it may not always show from me but it's true

even the haters here are smart

oh Joy!:dracula:
 

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Does that mean more QE fiat is pumped into the system & markets go up?
Does that mean they don't get a bailout & they have to start selling off stocks and the market goes down?
Does that mean the retired will take a pension cut and curb spending?
Does that mean the taxpayers will bail them out then Il, then NY, then state after state bail on pensions and stopping the economy in it's tracks?
Does that mean anyone, anywhere will be held accountable?
Does that mean it's Trump's fault?
YES, probably or possibly eventually. The market is still a casino, DYODD.
NO, they don't usually get much of a bailout because they usually don't get included with the Too Big To Fail group and their demise does not mean stocks will all go down a lot because of it, usually they hit over time.
YES, retired folk will always pay a heavy price.
NO, the worst cases will see some combination of restructuring and bail outs and occasional defaults. Lawyers and politicians are sure to get paid, everyone else can wait in line for a while or forever.
NO, nobody who is really to blame is ever held accountable for a fully corrupt economic system's symptom issues.

NO, Trump is not to blame, while the POTUS has a microphone to tell the truth and is the commander to give orders to the troops, he usually just plays golf or hangs out at nice resorts.
No POTUS has told the truth since the early days of Reagan. And no potus dare give out orders.

After those series of speeches JFK gave, not a single POTUS has talked straight to the American people and enlisted their help. Obviously, without the entire nation "up in arms" so to speak, no leader would stand a chance, so while the current POTUS is not to blame, he's just another of the same.
 

searcher

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Is Fed Pumping Stocks To Keep Pensions Solvent?




-- Published: Monday, 26 February 2018

By Dave Kranzler

The pension crisis is inching closer by the day. @CalPERS just voted to increase the amount cities must pay to the agency. Cities point to possible insolvency if payments keep rising but CalPERS is near insolvency itself. It may be reform or bailout soon. – Steve Westly, former California controller and CalPERS board member.

1.5 MILLION RETIREES AWAIT CONGRESSIONAL FIX FOR A PENSION TIME BOMB

In a story buried in the business section of the February 18th NY Times, it was reported that the spending budget passed by Congress included a provision that creates a 16-member bipartisan congressional committee to craft legislation that would provide for the potential bailout of as many as 200 multi-employer” pension plans. Like most State public pension plans most of these multi-employer plans are about to hit the wall of insolvency. A multi-employer plan is a union pension plan that covers employees of union working at different companies. This minor little detail was not reported anywhere else.

A good friend of mine who works at a public pension did an internal study of all major State pension plans and determined that a 10% or more decline in the stock market for an extended period of time would blow up every single public pension in the country. “Extended period of time” was defined as more than 3-4 months. Every pension fund he studied is a monthly net seller of assets in order to fund beneficiary payouts – i.e. the cash contributions from current payees into the fund plus investment returns on capital is not enough to fund current beneficiary payouts. Think about that for a moment.

As such, State pensions have dramatically ramped up their risk profile and most now invest at least 40-50% of their assets in stocks. If you include private equity allocations, the overall exposure to equity investments is 70-80%. CalPERS allocates 50% of its AUM to the stock market; the State of Kentucky is now at 60%. Historically, pension stock allocations have typically – and prudently – ranged from 25-35%.

The stock market has now experienced three 9-10% drawdowns since August 2015. Assuming the “V” move higher from the latest market plunge continues, each drawdown has been aggressively and swiftly negated by obvious Fed intervention. The Fed does not deny this allegation and even subtly alludes to a non-explicit goal of targeting asset prices.

With pensions now 50% or more invested in stocks, it seems pretty obvious that one way to inflate away the looming pension catastrophe is for the Fed to inflate the stock market. Two weeks ago the Fed reflated its balance sheet by increasing its SOMA holdings with $11 billion in mortgages. The SOMA account is the Fed’s QE account. An $11 billion SOMA injection to the banks translates into $100 billion in liquidity – through the magic of the fractional banking system – that can be pumped into the stock market. Who needs retail stool pigeons to chase extreme valuations even higher?

Most, if not all, pensions are quickly reallocating their equity investments for active to passive funds. “Passive” = indexing. This means that the Fed only has to worry about inflation the broad indices like the Dow, SPX and Nasdaq. That’s why an increasingly few number of stocks, like AMZN and Boeing, are driving the indices. There’s still plenty of stocks that continue to decline – GE, for instance.

I laugh and sometime sneer at those who think new Fed Head Jerome Powell will impose monetary discipline by raising interest rates at least up to the real rate of inflation and reduce the Fed’s balance sheet according the schedule as laid out by Yellen. After all, Powell is heavily invested in Carlyle Group, which owns many companies that are covered by union pension plans. He’s incentivized personally to keep the monetary gerbil running on the wheel.

And better yet, if the Fed can keep the pensions thinly solvent by pumping up the stock market, Congress and State Governments can defer the inevitable taxpayer bailout of public pension funds – for now.

http://investmentresearchdynamics.com/is-fed-pumping-stocks-to-keep-pensions-solvent/

http://news.goldseek.com/GoldSeek/1519677331.php
 

Uglytruth

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Lets see if I have this right.

Project an unrealistically high return rate.
Pay yourself very well.
Fall short of expected return.
Cry.
Retire
Leave the very people who entrusted you to do a job broke for life.



How does this compare to the Sheriff at the school shooting?
Project an air of authority & security.
Get paid while putting time in to collect a pension.
When it's your turn to step up you cower & people died.
Tell the world what a great job you did.
Retire.
Leave the very people who entrusted you to do you job dead.


Sorry guys I don't see any difference.
 

gringott

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Seems to me the time is long past to privatize schools, police and fire departments.
They have become our overlords instead of our employees.

Schools for example should be non-physical in this day and age.
A huge percentage of time in school is just wasted.
The "socialization" benefit is really a minus not a positive.
Plus the indoctrination of the childen into the marxist program is just wrong.
Hire a babysitter if you need one, don't make expensive teachers babysitters.
Plus the fantastic amount of money wasted by busing children here and there is insane.
I am positive that with 2 hours x 5 days a week of study a child will learn more than in school.
Plus they will not get "left behind" as they would learn at the rate they are capable of.
I spent the majority of my time in high school either sleeping or daydreaming, that is when I wasn't cutting class.
Shop classes being the exception.

Think about it, the huge expensive overhead of bureaucracy - gone.
The physcial plant costs - gone.
The cost of transportation - gone.
The pension costs - either gone [bureaucracy] or greatly reduced due to much higher internet teacher to student ratio.

The end of the "school shooter", need for expensive fat assed coward cops in school gone, all positives.
 

southfork

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Union hacks still own the politiicans, wont ever happen.

Seems to me the time is long past to privatize schools, police and fire departments.
They have become our overlords instead of our employees.

Schools for example should be non-physical in this day and age.
A huge percentage of time in school is just wasted.
The "socialization" benefit is really a minus not a positive.
Plus the indoctrination of the childen into the marxist program is just wrong.
Hire a babysitter if you need one, don't make expensive teachers babysitters.
Plus the fantastic amount of money wasted by busing children here and there is insane.
I am positive that with 2 hours x 5 days a week of study a child will learn more than in school.
Plus they will not get "left behind" as they would learn at the rate they are capable of.
I spent the majority of my time in high school either sleeping or daydreaming, that is when I wasn't cutting class.
Shop classes being the exception.

Think about it, the huge expensive overhead of bureaucracy - gone.
The physcial plant costs - gone.
The cost of transportation - gone.
The pension costs - either gone [bureaucracy] or greatly reduced due to much higher internet teacher to student ratio.

The end of the "school shooter", need for expensive fat assed coward cops in school gone, all positives.
 

searcher

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The Coming Pension Crisis Explained
Silver Fortune


Published on Feb 28, 2018
A comprehensive video explaining why the pension crisis is going to be huge news, what it causing it, and how it will affect every U.S. citizen, regardless of if they have a pension.
 

gringott

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All attempts to fix the $40 billion public pension hole for teachers and government workers in the Commonwealth of Kentucky are meeting massive resistance. Seems teachers didn't have to teach yesterday, they were in the Capital demanding everything stay the same, including for new hires.

They will not accept anything but total bankruptcy.
 

mtnman

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All attempts to fix the $40 billion public pension hole for teachers and government workers in the Commonwealth of Kentucky are meeting massive resistance. Seems teachers didn't have to teach yesterday, they were in the Capital demanding everything stay the same, including for new hires.

They will not accept anything but total bankruptcy.
Kentucky Teachers are not eligible to collect Social Security so their pension is all they get.
 

gringott

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Kentucky Teachers are not eligible to collect Social Security so their pension is all they get.
Not all but most. If they work at another job in their life that is covered, and paid in, they get it, it is based on quarters.

The strange thing is that if you ask a teacher, a lot do not know that .[not covered].

My DIL did not know. After working as a teacher several years.

Also, if they are not covered, THEY DON'T PAY IN TO SS. Why would they collect?

Detriot cops did not pay in to SS and got screwed royal in the Detriot bankruptcy. My heart bleeds for them.

I guess it boils down to why would you get a benefit you did not pay for?

Does not change the point, however, $40 BILLION IN THE HOLE.
You would think our highly educated, very intelligent teachers that are so valuable could do the math.
It seems they cannot.

THAT WHICH CANNOT BE PAID WILL NOT BE PAID.