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Pensions will probably do worse then I thought



December 15, 2009 – Comments (3)

I am reading one of Mish's post on problem mortgages and in the post:

Given the conditions on HARP, the cherry picking of prime loans by the lenders, the huge amounts of negative equity on loans made during the boom, and second mortgage conflict of interest situations, one should not be surprised to see lots of people complaining about not being helped.

Moreover, the harsh reality is neither the Fed nor the Treasury cares much if the securitized loans blow up. Those securitized loans are sitting in the hands of pension plans, hedge funds, foreign and domestic investors, and the hands of other fools that bought the trash.

Read the whole post and it is point out the degree to which "trash" was passed, and it ended up in people's pension plans.

My back of the napkin calculations on affordable pension is far more accurate then a lot of garbage and justifications from anyone who suggests otherwise.  If the numbers don't work out in a static calculation, one without inflation, they aren't going to work with inflation.  It has to work with contributions equal to payouts.  Any gain from making your money work for you has to be considered marginal at best.  I estimated pension could afford about half of what they promised and despite people's beliefs that they paid for their promised pension and they are getting ripped off otherwise, well, their belief system is flawed.

Depending on how much of a hit pension funds are taking with this mortgage mess, they will struggle to afford even half of what they promised.  If your pension fund invested heavily in this crap, start making plans for old age without a company pension.


3 Comments – Post Your Own

#1) On December 15, 2009 at 11:42 AM, chk999 (99.97) wrote:

There's a reason to manage your own retirement planning and investments.

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#2) On December 15, 2009 at 1:00 PM, alstry (< 20) wrote:

Few have a clue on how toxic things are........

Our entire pension system is riddled with toxic debt and toxic equity.

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#3) On December 17, 2009 at 3:29 PM, vriguy (72.28) wrote:

Your other blog today on Pittsburgh tells us how politicians are going to resolve public pension plan screw ups. 

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