Choose to Save offers the ‘The Ballpark E$timate’ for retirement savers

October 14, 2008

The

Choose to Save has a retirement calculator on there website that estimates current savings rates required for a given retirement date and payout: The Ballpark E$timate

Choose to Save is a program of the Employee Benefit Research Institute’s Education and Research Fund.

Written by Bear · Filed Under Featured, Repair

From MarketWatch: Pensions vs 401(k)s in light of the current crisis

October 13, 2008

Marketwatch highlighted the uncertainty of defined contribution plans today in an article entitled “Financial Crisis Recasts Debate on Pensions Versus 401(k)s”. Among observations made was:

“The current environment underscores some latent employer risks with 401(k) plans,” says Glickstein. “For example, they make it harder for companies to predict who will retire and when. Employees who mostly rely on 401(k)s are also more likely to worry about their financial security, creating an additional drain on morale and productivity during turbulent times.”

Written by Bear · Filed Under Defined Contribution, Featured

Canadian pensions take worst hit in 10 years

October 11, 2008

No surprise here. Both defined contribution and defined benefit plans in Canada are taking it on the chin. A release by Canwest News Service outlines the carnage suffered by Canadian pension funds in 3Q2008. The article, entitled ‘Canadian pensions take worst hit in 10 years‘ sites a 6% drop in the Mercer index, which shows the ratio of assets to liabilities in a model pension plan.

“The financial health of Canadian pension plans was markedly worse as the market tumbled through the end of September,” consulting firm Mercer said, noting that its pension health index was down six per cent at the end of September from the end of the second quarter, and about 10 per cent for the year.”

It is projected to have fallen to 70% by 9 October. The article goes on the say that,

“According to one estimate, company pension funds have lost about $50 billion over the past six months in the stock market, while individuals have lost an estimated $30 billion.”

Underfunded defined benefit plans could pay pensioners according to the level of funding, which would have current retirees walking away with a pension valued at 70% of the promised value.

Defined contribution plans are typically following the markets, which would put many retirees’ portfolios 40% short in Mid October.

Written by Bear · Filed Under Featured, Public Pensions

Cities and states to ‘come clean’ on pensions

September 11, 2008

In a New York Times article, entitled `Government Rule Makers Looking at Pensions‘, we learn that the plight of public pensions will soon be brought to light. At risk to the cities and states are their bond ratings, and potential for ‘pension misconduct’.

NORWALK, Conn. — As cities and states struggle with ballooning retirement costs, accounting rule makers started an ambitious project Thursday to force state and local overnments to issue better numbers and reveal the true cost of their
pension promises.

Written by Bear · Filed Under Featured, Public Pensions

$99.2 Trillion Payoff- Will Uncle Sam walk away?

August 11, 2008

Last week Dallas Federal Reserve Board President, Richard Fisher, priced the present payoff for Social Security, Medicaid and Medicare at $99.2 trillion. This staggering total slipped through the big media outlets almost without comment. One has the sense that no one in America-or the world-believes that we will be able to meet our obligations, but that’s not Mr. Fisher’s main concern. He’s worried that our government will succumb to the temptation that apparently every government before us has, which is to ‘monetize’ the obligation, or reduce the actual burden by printing more money. Fisher notes that:

‘We know from centuries of evidence in countless economies, from ancient Rome to today’s Zimbabwe, that running the printing press to pay off today’s bills leads to much worse problems later on. The inflation that results from the flood of money into the economy turns out to be far worse than the fiscal pain those countries hoped to avoid … Inflation is a sinister beast that, if uncaged, devours savings, erodes consumers’ purchasing power, decimates returns on capital, undermines the reliability of financial accounting, distracts the attention of corporate management, undercuts employment growth and real wages, and debases the currency.’

Richard Fisher, Dallas Fed Reserve President and CEO http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm

When asked the naive question, “Will will Social Security and Medicare have enough money to give me my benefits when I retire?”, the answer is a resounding, “Yes!-provided that we can come up with another $100 trillion over the next few years.” Which is to say “No-it is beyond the realm of the possible.”

Added to the unscalable mountain It is unlikely that the US taxpayer will ever be able to , while addressing ongoing budget shortfalls (currently $10 trillion) as well as unfunded liabilities at every other level of government.

Written by Bear · Filed Under Featured, Social Security

£36bn gone from top 200 UK funds in June

July 11, 2008

The turndown of equity markets in June cost the top 200 largest privately-sponsored UK pension funds a total of £36bn. That leaves three quarters of the funds in deficit by £30bn. This shocking vulnerability makes one wonder what will happen to pensioners who have the misfortune to start drawing their pensions during a prolonged economic downturn.
At one time it would have been argued that pensions must guarantee a defined standard of living that is independent of equity markets. This social contract made sense to the generation that suffered the Great Depression a World War and two decades of recovery–less so to the current generation of politicians and fund managers.
Shares gloom leaves pension funds with £30bn deficit

Written by Bear · Filed Under Corporate Pensions, Featured

NJ unfunded liabilities hit $83 billion

June 14, 2008

‘New Jersey’s pension fund faces a $25 billion deficit, with the state also obligated for $58 billion in medical benefits for retired government workers.’
http://www.forbes.com/feeds/ap/2008/06/05/ap5087249.html

Written by Bear · Filed Under Featured, Public Pensions