Sure. A pool of money from several funds in an eastern state (I forget which) had exposure to Madoff through feeder funds.
Additionally, many pension funds had participated in shady derivatives deals, I think it was Milwaukee or Sheboygan. Large losses to the fund.
Calpers just wrote off something like 105% of a real estate deal that went south (the extra must have been for expenses incurred). There are many other cases. Much of this was government employee's pension money, but the implication is clear that you have to watch what your money managers are doing, and make sure that they are acting in your interests.
There are currently several investigations occurring nationwide about pension managers' possible fraudulent actions.
An afternoon on the internet will yield more.
Of course there are bad decisions made by asset managers all the time, myself included wrt my own 401k. This doesn't prove that management is WILLFULLY doing this, which is what you seem to be implying originally. Management is not that smart.
Perhaps they should have been. Several severely underfunded pensions started going overweight equities (compared to normal weightings) just before equities started their slide. While it is true that it was a panic move to try and meet shortfalls, they still used historic equity appreciation models to justify this reallocation. Unless you actually believe that these managers knew they were rolling the dice on stocks. Either way, the commonly accepted 8% per year will end up turning out to be a fallacy.
I don't expect you to believe me, but just wait and see.
Btw: I got out of equities at Dow 12,800 (going up). So not everyone was blind to the problems that were brewing.
Timing the market is bad investment strategy in my opinion, as you usually fail. Of course money managers think they know it all and take risks, the pension boards job is to vet this process. My point is from a management perspective they use pensions as tax shelters for corporate earnings. If the law allowed them to ignore a couple of bad years and rely on prior funding ratios (which is how the additional minimum contribution is calculated for DB pensions), they followed it. There is nothing sinister happening here.
Not misguided, because I make no assumptions about whether they care. In fact, based on many labor groups' actions, an argument can be made that the very senior may actually not care at all. I have no comment on their intentions.
My statement stands: Labor groups IF they care, would do well to monitor pension funding more carefully. I fail to see how more oversight of this will harm pensions.
What oversight? The plan is legally mandated to follow a laid out asset allocation strategy. Labor unions are just another layer to add to the bureaucracy. The teamsters in the 70's did a great job with their pensions......
Good thinking. Let's go further with that. I suppose that you think that ALPA should also not have their rudder swayed by all this safety nonsense either. They should focus on the best pay and work rules.
C'mon sim, this is a stretch. Safety in aviation is something ALPA SHOULD be an expert in as it is their own profession. Corporate finance is not their cup of tea.
You are apparently very interested in ALPA ensuring that the words printed on the paper in the contract say things that pilots like. I guess it is a bridge too far to oversee this and ensure that the funds promised are in the account on time and that realistic investment models are being used.
Trusting management to ensure that the funds are there has not been a real winner as of late.
Again, I am not coming out in favor of or against DC or DB. I am simply stating that negotiating a pension and then having ineffective oversight of the funding or investment strategy is not a great way to operate. We have commitees for everything else, you know.
Or you could, in the interest of reducing beaureucracy, just leave the current system in place.
There are arguments both for and against what you say. The point is though that the pension is a corporate transaction, no different than say payroll. I am furloughed and thus my payroll has been directly affected, but I do not think ALPA has the right to dictate how my airline should be run (and its lack of teeth lately seems to show this true). Businesses must be allowed to make decisions based on what their shareholders deed worthy.
See above. Not for or against. If the pilot group has a preference for DB, that is what they will try to negotiate.
Large equity exposure is risky, Like I stated above, many of these funds ran to equities in a panic to goose returns. Now they're screwed. There are also some serious fundamental flaws in the long-term stock market investment assumptions. Too much to go into now, but stocks will remain bad for some time to come. the bull market since 1982 has seduced everyone with the buy-and-hold strategy/religion. It is now coming unglued.
Again this is your strategy. I can point you to plenty of people I have flown with that will swear the exact opposite to what you preach. Just give them some derivatives and spiders and they'd claim to make a lot of money.
I prefer DC for myself since I prefer to do my own investment research.
The idea that DC is better is opinion. There is not reason that a pension fund manager cannot allocate according to employee age and achieve the same results. I think you are skeptical that the right decisions would be made, and you may be correct.
The average employee, though, is probably going to pick a handful of funds and let it ride.
You are obviously a huge fan of DC, which is fine. I prefer it myself.
But my whole post was about the problems and possible solutions for DB plans, if they remain. Getting rid of them, which you probably prefer, is just one more way of solving the existing problems.
Not a huge fan whatsoever, as I stated if you're early retirement eligible - DB is clearly worth more. However, I am simply trying to point out the pitfalls of why DB plans are dying (all over industry). I commend your ideals, however the cynic in me says things will remain the same.
