America

Banana Republic?

With corruption like this, it’s no wonder so many pension funds are insolvent

Last week, the head of a New York state pension fund found herself a new job. 

Vicki Fuller, the former head of New York’s $209 billion fund, now earns $275,000 per year working part time for a natural gas group called The Williams Companies– good work if you can get it. 

It’s noteworthy that when Ms. Fuller ran her state pension fund, she invested $110 million of taxpayer money to buy bonds issued by none other than The Williams Companies. 

Bear in mind that Moody’s, the credit rating agency, downgraded Williams’ financial outlook to “negative” because of the company’s high leverage and risk. 

The fund that Ms. Fuller managed also voted in favor of huge, multi-million dollar pay packages for senior executives of The Williams Companies even though the stock price was dropping. 

So… gee… maybe it’s just a crazy coincidence that Ms. Fuller left her job at the state pension fund and took an extremely lucrative part-time job THE SAME WEEK with The Williams Companies.

While you might not be able to rely on your pension or Social Security in the future, there’s nothing stopping you from setting aside money for your own retirement.

And there’s absolutely ZERO downside to doing this– no one is going to be worse off for having extra money for retirement. 

DYI:  DYI has reported to the point of redundancy that not only are there reoccurring conflicts of interest [and outright fraud] occurring here in the States such as those that happen in banana republics AND these plans are massively underfunded making it impossible to keep the promise of payment stream when Boomer’s arrive for retirement in mass. 

Bottom line even if the U.S. stock and junk bond markets DO NOT CRASH; these old school plans will have tax increases to help with the funding AND participants will end up receiving LESS than promised.  Add on a market crash that DYI envisions to the tune of 60% to 75% decline old folks will come out with pitch forks looking for over promising politician to politically stab.  The point being during the next downturn it will not be the banks getting into trouble on a mass basis, it will be pension plans including 401k’s as well especially those who are in the 50 plus age range.

The author is correct you will need to set aside additional monies for a secure retirement plus those extra dollars for all of those seen and unseen expenses that come along way before retirement.

What the article doesn’t cover is fees, taxes, inflation, and determining risk based upon valuation.  This is exactly the four items that are addressed routinely here at DYI.

DYI