According to the Center for Retirement Research at Boston College, in The Funding Status of Locally Administered Pension Plans by Alicia H. Munnell, Jean-Pierre Aubry, and Kelly Haverstick, US state and local governments have suffered estimated pension losses of $865.1 billion for the 14 months ended Dec 16.  This represents a 37% decline over that period.

The report states: “To return to 2007 actuarial funding levels by 2010, the 109 funds would need annual returns of 52% on assets.”

Similar Posts

7 Comments

  1. Brad:

    This is incredible. Even I am speechless. Never steal anything small is the motto of the day and it would appear the ratings agencies will continue in their obedience.

    A municipal bond may be worthless, but who cares if you can keep the rating and the price up. Now let’s see how we keep the interest and repayments going. Sad to say, that has become the same question as how we keep the interest and repayments going on US Treasuries.

    Catherine

  2. I really appreciate the Solari Report. One reason is that it’s difficult knowing what publications to believe these days. Standard and Poors parent company is McGraw-Hill who also publishes Business week and my college textbook on Personal Finance. Of course the text book does not mention financial permaculture either.

    “S&P: Public plans’ long lead time and use of smoothing methods will reduce budget volatility

    Long Lead Time Helps State And Local Governments To Cope With Pension Plan Losses, Report Says

    THE MCGRAW-HILL COMPANIES INC (“MHP-BHDNPX”) – Long Lead Time Helps State And Local Governments To Cope With – Pension Plan Losses, Report Says NEW YORK Jan. 27, 2009–Public pension fund losses aren’t likely to have an immediate impact on U.S. state and city governments’ credit quality because accounting rules allow these administrations to “smooth” such valuation declines over several years for actuarial purposes, Standard & Poor’s Ratings Services said today in a report. “This leads to gradual increases in governmental funding following a market decline,” said Standard & Poor’s credit analyst David Hitchcock. “Therefore, volatility in pension fund assets doesn’t necessarily equate to a like amount of volatility in the government sponsor’s annual budget.”

    Thanks,
    Brad

  3. I am writing to ask for your help I don,t know were but I take my first step I need help for The Orphans and homless childrinof RDC. The Congo I have Big Land it is a Farm but now is abandonned But the grace of God I can to you asking for help because my Country is in Badchip and I can help Because I have Love and Land but I do not how ,were to start so please if any body get this mail Please in Jesus name I am asking you to save the childrin is the futur but in my Country they are Victimes my heart hurt it why I stand up and i am looking away please help the childrin they Schould Live not died forgive my writing I am french speaking .May God bless you for good jobs I Love AgricultureBeacause is the source of Lives with out food no body will survive it was I came To you because youre saved humanity every day God bless that was my passion song for my Country Childrin hoping to ear for you soon .here my phone 416-741-4645 thanks and bye for now may God bless you T

  4. I have passin for the Orphans and Homeless Childrin I have a bigLand I don,t no where to start .So
    I am hoping to fund help were I am writing to every one I am sur god will touch your Heart .Please Please This is my tel 416-741-4645 Thank for your love and kindness mais God bless you .I love Agricture but I don,t know athing about it because the troubles in Congo RDC no Chance to learn if Is only runing for our lives .Again please help the Childrin .Thanks

  5. Doug:

    I don’t know — it is a good question, however. I suspect that there are more losses in state and local reserves and pension funds to be announced or covered up. It is too easy for Wall Street to stuff garbage in these funds in order to clean up various messes.

    One thing I am sure of — there are a lot of government officials, trustees and legislators who prevented a lot of shenanigans and it sure did not help their careers. We owe them a big round of applause and some appreciation.

    Catherine

  6. Catherine,

    I’ve read various books (an example would be FIASCO) and articles that paint in my opinion a rather unflattering view of pension plans (and insurance companies) “investing” in derivatives. Every so often we hear news of a school district, city, pension plan, etc that blew itself up in such trades.

    Would you have any general comments as to how pandemic this might be and if you think this could be a powderkeg waiting to blow. Do you think it’s possible that city and state bidget shortfalls occuring right now – could be a result of such trades that are being swept under the rug under the guise of its a ‘tough’ economy.

    Thanks, Regards, DH

  7. BORROW TO BUY STOCKS?

    Borrowing to buy stocks would typically be unacceptable advice if we were to ask our own personal financial planner if we should. But it is notable that the pension industry is being exposed to such ideas. I’m not talking about margin, but selling bonds for capital to invest in the equity markets. Note this article by Girard Miller published at http://www.governing.com. http://www.governing.com/articles/0901gmillere.htm#item5

    New paradigms don’t make new ideas good,
    Brad

Comments are closed.