Report: 85% of pensions could fail in 30 years

by Matt Krantz

Influential and well-regarded hedge fund Bridgewater Associates Wednesday warns public pensions are likely to achieve 4% returns on their assets, or worse. If Bridgewater is right, that means 85% of public pension funds will be going bankrupt in three decades. 

Many pension observers make the claim pensions will achieve 7% to 8% returns. But even if that assumption is correct, which is unlikely, public pensions are looking at a 20% shortfall, Bridgewater says. A 4% return is much more likely, the firm says.

DYI Comments:  Are the Fed's stepping away from QE because the economy is on the mends? The mega banks that the Federal Reserve works for have now been recapitalize to a point to where they can end the money printing.  What has happened they are now recognizing their sub atomic low interest rates have dropped long duration bond portfolios the main stay investment for pension.  This due to their mathematical certainty to pay pension recipient's.  A normal portfolio (or should be) in a defined benefit plan is 40% stock and 60% bonds.  The bonds being the certainty and the stocks as the kicker for the higher return.  Not only are the old style pensions affected this underpins every entity that relies on insurance type of products (life insurance, hazard insurance [fire, theft etc.].  I can only imagine the Fed's through back channels are receiving, and deservedly so, holly hell!  Plus the Social Security trust fund (Yes I know they are IOU's) use four year notes that are rolled over to a lower and lower yield.  This moves up the day of reckoning politically to place this program back into balance [without a bailout or increase FICA taxes benefits will have to drop 25%].

All in all QE is going to end.

DYI