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Here We Go: The Pension Collapse is Now Underway

from Rogue Money:

A few months ago, the largest public and private pension funds announced that they were so underfunded that they would have to begin cutting benefits, or in the case of Central State Pension Fund, even cut payments to retirees altogether. But this now appears to be just the start of a worldwide pension collapse thanks mostly to the actions of global central banks in their decisions to pick a few winners to the detriment of everyone else.

The Central States Pension Fund has no new plan to avoid insolvency, fund director Thomas Nyhan said this week. Without government funding, the fund will run out of money in 10 years, he said.
At that time, pension benefits for about 407,000 people could be reduced to “virtually nothing,” he told workers and retirees in a letter sent Friday.

In a last-ditch effort, the Central States Pension Plan sought government approval to partially reduce the pensions of 115,000 retirees and the future benefits for 155,000 current workers. The proposed cuts were steep, as much as 60% for some, but it wasn’t enough. Earlier this month, the Treasury Department rejected the plan because it found that it would not actually head off insolvency.

The fund could submit a new plan, but decided this week that there’s no other way to successfully save the fund and comply with the law. The cuts needed would be too severe.
— CNN Money

This announcement was from back in May, but here in the last week of August, two new critical reports show that the problems in the global pension arena are not only limited to a segregated few, but are occurring fast and furious around the world.

World’s Biggest Pension Fund (Japan) Hit with a $52 Billion Loss

“Japan’s Government Pension Investment Fund (GPIF) has posted a loss of $52 billion for April to June, following the tumbling Tokyo stock market and the yen’s surge.

The value of the fund’s assets dropped $1.3 trillion last quarter, wiping out all the gains GPIF made since October 2014, when it revised its investment strategy and put more money into stocks and foreign bonds.

The decline is another disappointment for the fund after a reported annual loss of 3.8 percent for the year ended in March, the worst performance since the financial crisis in 2008.
Concerns over the US economic outlook as well as UK’s vote to quit the European Union significantly hurt global equity markets, boosting demand for Japanese currency which was seen as a haven for investors in a time of economic uncertainty.

As a result, the yen surged against other currencies, reducing the value of overseas assets by 7.8 percent.
— Russia Today

So just within the past three months we have seen the world’s largest pension fund, and America’s two largest public and private funds experience losses so dire to their capital that they are beginning to cut promised benefits to current and soon to be retirees.

But it certainly doesn’t stop there, and in something that took place on Friday in the state of Illinois, the problem is now bringing the taxpayer into the mix at a time when the economy is ready to fall into the next recession.

Read More @ RogueMoney.net

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