•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

US pensions time bomb to put corporations out of business Alec Hogg writes from the GAIM conference in Cannes: ...Most memorable of the first day’s keynote speakers was Bradley D Belt, recently resigned head of the US Government’s Pension Benefit Guarantee Corporation. The concern starts when you hear that a month after his departure, the White House still hasn’t found a replacement. Especially when you consider this is America’s insurer of national pension fund obligations. Why nobody is rushing to volunteer becomes obvious when Belt explains the enormous stresses which the system is being subjected to. And the apparent lack of political will to take tough decisions that are urgently needed.

For reasons best known to themselves, many US corporations continue to offer defined benefit pensions to existing and future retirees. Belt blames the herd mentality for their inability to change: “It defies rational explanation. Management of companies making widgets are now actually running captive insurers.” He identified the deteriorating pensions funding situation a major opportunity for hedge fund managers, prodding them to put actuaries onto the case. Belt reckons that only by analyzing two-year-old official numbers and extrapolating forward will anyone get a handle on massive corporate liabilities that are not being disclosed to investors.

Says Belt: “The market is mis-pricing the pensions risk (in company share prices) because it is does not have the data. T......................

To view our full article Click here