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  #881  
Old 07-15-2019, 10:26 PM
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Mary Pat Campbell
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UNITED KINGDOM
ARCADIA

https://www.theguardian.com/business...verseas-assets
Quote:
Pensions watchdog could go after Philip Green’s overseas assets
Regulator confirms it has power to pursue sums pledged to Arcadia pension scheme


Spoiler:
The Pensions Regulator could target Sir Philip Green’s overseas assets to secure promised contributions to Arcadia’s pension scheme.

Guarantees given by Green and his wife include a 100m “cash” payment from Lady Tina Green, 75m over three years from Arcadia Group Ltd and a further 210m in security from Arcadia.

The pledges were made as part of a series of company voluntary arrangements (CVAs) which are subject to final approval on Wednesday, the Commons work and pensions select committee said.

The committee’s chairman, Frank Field, has suggested Green should “stump up” the necessary amount “from his family coffers”.


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The Pensions Regulator (TPR) chief executive, Charles Counsell, wrote to Field this month saying: “Providing that the CVA is successful, TPR will have direct rights under the arrangements with Lady Green to enforce her obligation to pay the promised sums to the Arcadia schemes. More generally, TPR’s powers are not restricted by jurisdiction, and we have pursued parties located overseas in the past.”

The Arcadia pension scheme, with nearly 10,000 members, is running an estimated deficit of between 537m and 727m, the committee said. Arcadia owns Topshop, Topman, Burton, Dorothy Perkins, Miss Selfridge, Wallis and Evans.

Field said: “Finally we see the famous Green chequebook produced, by Lady Green, to make good on at least some of the current promise to Arcadia’s pension scheme. Following the committee’s intervention, this is the first time TPR has confirmed it could pursue the Greens’ assets overseas to make good on the CVA promises.

“But that still leaves a worrying amount tied to Arcadia’s fortunes. It is for Sir Philip Green to prove he can make a success of Arcadia, but to prove his commitment to Arcadia’s staff and pensioners, he could promise now also to stump up the rest from his family coffers.”


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  #882  
Old 07-16-2019, 07:07 AM
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NEW YORK
ST. CLARE'S

https://www.timesunion.com/news/arti...t-14083928.php
Quote:
Cuomo's lack of knowledge about St. Clare's pension condemned
Spoiler:
ALBANY – Gov. Andrew Cuomo's comment to reporters on Tuesday that he has "to look into" St. Clare's Hospital's pension crisis has sparked anger among some local lawmakers.

The comment, that aired on WTEN, has united State Senators George Amedore and James Tedisco with state Assemblymembers Angelo Santabarbara, Chris Tague and Mary Beth Walsh in condemning the governor's lack of knowledge about the issue facing St. Clare's retirees who have lost or had their pensions reduced.

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"I was sad to see the interview on WTEN that the Governor is not familiar with the plight of 1,100 St. Clare's pensioners," Tedisco said. "He's got a lot of issues on his so-called 'Justice Agenda' but clearly there's no justice for the St. Clare's retirees."


Walsh said it was incredible that Cuomo was unfamiliar with the issue, especially after hundreds of petitions were delivered to the governor's office in June.

"If someone had only opened that door and listened to the pleas being made by these hardworking New Yorkers, he would have already known," Walsh said.

The Times Union previously reported that more than 1,100 former St. Clare's employees learned last year that their pensions would be sharply reduced or eliminated because the fund was wiped out by the 2008 recession and the Catholic church's decision to stop funding it. Tedisco said that roughly 400 former St. Clare's workers will lose most of their pensions, and the remaining 700 or so workers would lose all of their pension. The Schenectady hospital was mandated to merge with Ellis Medicine in 2008.

The state's Attorney General's Charities Bureau is looking into the St. Clare's Corp., which ran the pension fund.

Tague said the loss of pensions for retirees is a crisis that has torn apart the lives of the pensioners.

"It's as unacceptable as it is troubling," Tague said. "It undoubtedly makes many of us wonder what it really takes to get the governor's attention to take action when a crisis like this occurs."

Santabarbara, the only Democrat to express his distress with Cuomo's comment, said he is disappointed.

"This is something that began last year with more than 1,100 retirees of the former hospital in Schenectady losing pensions," Santabarbara said. "I have received no response to my letters and not to mention the Attorney General's office is now investigating the matter — this is unacceptable."

On Twitter, Amedore called Cuomo's comment disturbing and unfortunate.

"I hope the Governor does what he says, and finally looks into it – because it's long overdue," Amedore tweeted.

Bishop Edward B. Scharfenberger, who has served on the hospital's board of directors and is a member of the St. Clare's Corp. told WTEN that he "will continue to work with anyone who wants to collaborate to help pensioners deal with this very difficult challenge."

Responding to the reaction, Cuomo's office reached out to WTEN to say it supports the Attorney General's investigation and "awaits its results."


https://www.news10.com/news/local-ne...oking-into-it/
Quote:
NEWS10 has been aware of St. Clare’s pension issue since last year as governor still ‘looking into it’

Spoiler:
ALBANY, N.Y. (NEWS10) – For the past several months, St. Clare’s pensioners have garnered the support from local lawmakers and even the Albany Diocese.

When it comes to Gov. Cuomo, he has been silent on the issue until his comments on Tuesday.

On Tuesday, during a press conference, New York Governor Andrew Cuomo says he has to look into St. Clare’s pensions.

A spokesman for the Governor sent NEWS10 ABC the following statement Wednesday evening:

“The Governor is certainly aware of the St. Clare’s pension issue and the fact that the State previously stepped in by providing $50 million to facilitate the hospital’s closure, including $29 million to help support the pension fund. The owner of the hospital, the Catholic Church which was responsible for its closure is also responsible for the remainder and for their employees’ fair share. We join in the concerns of the hospital’s former employees and await the results of the Attorney General’s investigation.”


As Gov. Cuomo is still looking into the St. Clare’s pensions, NEWS10 has been covering this story since last year. Here’s a timeline of our coverage:

Mobile users, click here to see our coverage.


https://cbs6albany.com/news/local/cu...tion-draws-ire
Quote:
Cuomo's response to St. Clare's pension crisis question draws ire

Spoiler:
ALBANY, N.Y. (WRGB) – On Wednesday, New York State Attorney General Letitia James responded to questions concerning the St. Clare’s pension crisis. It came one day after Governor Cuomo’s response that drew criticism.

In Utica at a press conference announcing funds to combat zombie homes and revitalize neighborhoods, the AG took off-topic questions.

Her office is investigating what happened to the pension funds.

“The investigation is pending, there is not much more that I can say. But again I am very much concerned about the security of these 1,100 individuals. It is really critically important that we provide them with some assurance we will get their monies back to them,” said James.

Governor Cuomo’s office responded to questions about his previous response of “I have to look into it.”

A spokesman for Cuomo said, “We support the Attorney General’s investigation and await its results."

Mary Hartshorne, co-chair of the St. Claire’s Pensioner’s Committee, says there is no possible way he didn’t know about it.

“I can’t even tell you how many emails and letters we have sent and I’m talking hundreds and hundreds with not even a response, which was surprising.”

She continued saying they also had a rally at the Capital June 17th with almost 100 people.

When Attorney General James was asked whether she’s working with the governors office, she said “the office of Attorney General obviously is an independent office. The Charities Bureau obviously is investigating.”

Last year, more than 1,100 former St. Clare's Hospital employees and retirees were notified their pensions would be either be significantly reduced or eliminated with just three weeks notice.

Hartshorne says she got a partial payment, but recently had to sell her home.

“The point is you can’t just pull the rug out like that. You have to give people notice,” Hartshorne said.

St. Clare's Hospital was closed 10 years ago through a state Commission and operations absorbed by Ellis Medicine. At the time, the state paid $50 million to St. Clare's to cover transition costs including $28 million to cover the anticipated needs.

Hartshorne said she is very positive after all of this that the governor will contact them.

"The Governor is certainly aware of the St. Clare’s pension issue and the fact that the State previously stepped in by providing $50 million to facilitate the hospital’s closure, including $29 million to help support the pension fund. The owner of the hospital, the Catholic Church which was responsible for its closure is also responsible for the remainder and for their employees’ fair share. We join in the concerns of the hospital’s former employees and await the results of the Attorney General’s investigation.”

CBS6 obtained the following statement from the governor's office:

"The Governor is certainly aware of the St. Clare’s pension issue and the fact that the State previously stepped in by providing $50 million to facilitate the hospital’s closure, including $29 million to help support the pension fund. The owner of the hospital, the Catholic Church which was responsible for its closure is also responsible for the remainder and for their employees’ fair share. We join in the concerns of the hospital’s former employees and await the results of the Attorney General’s investigation.”

CBS6 obtained the following statement from the Roman Catholic Diocese of Albany:

Bishop Scharfenberger welcomes the Attorney General’s inquiry into the pension plan so that questions many others have had will be addressed.

The Diocese of Albany would like to clarify that the Catholic Church never owned St. Clare’s Hospital or St. Clare’s Corporation. The diocese was never involved in the governance and operation of St. Clare’s Hospital or St. Clare’s Corporation, including its assets, liabilities and pension plan.

As a board member, Bishop Scharfenberger continues to work with pensioners, legislators and other interested parties who want to come together to find a solution to this very difficult situation.


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  #883  
Old 07-16-2019, 07:25 AM
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https://www.ai-cio.com/news/supreme-...on-fund-cases/
Quote:
Supreme Court Declines to Hear Two Pension Fund Cases
Lower court rulings involving an automotive, mineworkers’ pensions maintained.


Spoiler:
The US Supreme Court has declined to hear two cases involving pension funds: Toshiba Corp. v. Automotive Industries Pension Trust Fund, and First Solar Inc. v. Mineworkers’ Pension Scheme.

Toshiba Corp. v. Automotive Industries Pension Trust Fund centers on two conflicting rulings over whether the Securities Exchange Act applies, without exception, whenever a securities fraud claim is based on a transaction in the US. The US Court of Appeals for the 9th Circuit has ruled that the Act applies without exception, even if it mainly involves foreign conduct. However, the US Court of Appeals for the 2nd Circuit has ruled that the act does not apply in certain circumstances.

The 9th Circuit, unlike the 2nd Circuit, held that the US Securities Exchange Act always applies to a securities fraud claim involving a domestic securities transaction, even if the claim is against a foreign issuer that did not participate in the transaction, has not entered the US securities markets, has committed the alleged fraud abroad, and is subject to ongoing oversight by foreign securities regulators.

When the Supreme Court asked for its views earlier this year, the US government recommended that the petition be denied, and told the high court that the lower court’s decision, which left open the possibility that the case could go forward, was correct, and that because there has not yet been a final judgment in the case it might not be necessary for the Supreme Court to weigh in.

The Supreme Court also declined to hear a case involving when stock loss causation lawsuits can be brought in First Solar Inc. v. Mineworkers’ Pension Scheme. At issue is whether a plaintiff may establish loss causation based on a decline in the market price of a security when the event or disclosure that triggered the decline did not reveal the fraud on which the plaintiff’s claim is based.

In 2012, investors sued First Solar, Inc., an Arizona-based company that makes solar-panel modules, alleging that it failed to disclose defects in its solar panels, and then misrepresented the effect of those defects. Under the Supreme Court’s cases, a plaintiff in a securities fraud case must show that the defendant’s fraud caused him to lose money. First Solar asked the court to decide whether the investors can make this showing when the event or disclosure that caused stock prices to go down did not itself reveal any fraud.

When the court sought out views on this case, the government also told the justices that the ruling by the US Court of Appeals for the 9th Circuit, which allows the case to move forward, is correct and does not conflict with the decisions of any other courts of appeals.


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  #884  
Old 07-17-2019, 06:37 AM
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https://www.wsj.com/articles/compani...es-11563188581

Quote:
These Companies Aren’t Cheering Lower Interest Rates
Some businesses expect to face an earnings hit

Spoiler:

Not everyone is cheering lower interest rates.

Last year, U.S. corporate pension funds had one of their better years in recent history, despite the fact that stocks and bonds both did poorly. Higher interest rates helped, as did a rush to contribute to pensions ahead of tax changes. Both factors could go into reverse in 2019. An earnings hit could be the result for some companies.

The funded status of S&P 500 company plans improved last year. Companies were given an incentive to contribute to funds while they could still deduct contributions at a higher 35% tax rate. Contributions by Russell 3000 companies climbed almost 40% in 2017 and 2018 combined compared with the preceding two years, according to Wolfe Research. Total funding figures also were helped by the nifty numbers game that rising interest rates create for long-dated pension funds, Zion Research says.

Pension funds apply a discount rate to their future funding requirements to calculate how much they owe in today's dollars. As a result, liabilities move inversely to corporate-bond yields, which track Treasury yields. Last year, yields rose. Since then, though, the 10-year U.S. Treasury note yield has dropped unexpectedly to the lowest levels since 2016.

There are mitigating factors: Declining yields have the near-term effect of boosting bond prices, and bonds make up a larger part of overall portfolios than the past -- from 36% in 2009 to 47% last year, Zion says.

But that is still a minority of the portfolio and, since the duration of the pension is longer than the overall duration of bonds in the portfolio, changes in bond yields have a larger effect on the discount rate. As a result, pension funding fell from a 93.7% ratio at the end of September 2018 to 85.6% at the end of May for companies in the S&P 500, Wilshire Consulting estimates.

Shorter-term volatility in rates isn't necessarily a problem if rates are either relatively high or expected to go higher. Neither is the case at the moment. A lower-for-longer scenario on rates is unambiguously bad for corporate pensions. Meanwhile, pension contributions by Russell 3000 companies are expected to decline 46% to $40 billion this year, Wolfe Research says.

Despite lower cash outlays, the gap could hit earnings as the economic cycle turns. Pensions in past cycle peaks were actually overfunded, by 22% and 4% in 2000 and 2007, respectively, Wolfe Research says. Companies with a relatively large share of pension costs compared with earnings, such as Alcoa and Raytheon, could be prone to big swings in earnings, according to Wolfe. Investors could find lower rates mean some unpleasant surprises.


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  #885  
Old 07-22-2019, 11:20 AM
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https://www.thinkadvisor.com/2019/07...&utm_term=tadv

Quote:
Effects of Corporate Restructuring on Pension Benefits Not Entirely Clear: GAO
"Limited data" is making it hard to understand the full impact on a broad basis
Spoiler:
There’s been a significant amount of corporate restructuring since 1999, with mergers and acquistions making up the bulk of it, but the full impact on pension benefits across all industries remains murky because of the “limited data” available, according to the Government Accountability Office.
Some pension and restructuring experts said it was hard to attribute specific pension benefit changes to restructuring events, GAO said in a new report, “Retirement Security: Trends in Corporate Restructurings and Implications for Employee Pensions.”

For one thing, the report noted that a particular restructuring event “may not specifically trigger or cause a change to pension benefits.” However, “alternatively, pension benefit changes may be made with or without regard to any underlying restructuring event,” it said.
Key sources of restructuring data, including Bloomberg, haven’t specifically been intended to track changes in pension benefits and data has not been “exhaustive of all types of restructuring events,” GAO said. For example, a corporation could introduce measures that slash its workforce and future pension obligations, but such measures weren’t in the datasets GAO analyzed, it said, noting that it examined trends in corporate restructuring since 1999 and their implications for pension benefits.

Comprehensive data that details the effects of corporate restructuring on retirement benefit plans simply doesn’t exist, it said.
One expert pointed out that, as with corporate restructuring events, an acquiring firm will often “harmonize their benefits so the target firm’s benefits are made similar to the acquiring firm,” GAO noted. As a result, some employees may obtain access to another firm’s pension and benefit programs, it said.
Other experts told GAO that a corporate restructuring could also prompt a company to “rethink its companies’ employee benefit structures,” it said, adding that a few experts said there was less time for some stakeholders, including employees and retirees, to determine how the restructuring would affect their pension plan. As a consequence, those experts said impacted stakeholders, including retirees, “may be excluded from certain negotiations,” GAO said.
Bankruptcy reorganization might help a company eliminate or restructure debts it can’t repay and could help creditors receive some payment in an equitable manner, it went on to say. But bankruptcy “can be a contentious process where stakeholders compete for assets that are often diminishing in size,” and employees could lose access to an employer-sponsored pension, GAO’s analysis of the UCLA-LoPucki Bankruptcy Research Database (BRD) data found. On average, companies may emerge from bankruptcy with more than 25% of their employees slashed from the payroll, it noted.
For the report, GAO reviewed and analyzed Bloomberg Terminal data on M&A and other types of restructuring events from 1999 through 2018, analyzing completed corporate restructurings of at least $100 million in completed value in 2018 dollars. GAO also analyzed BRD data for information on large, public bankruptcies that occurred from 1999 through 2018.
The most well-known bankruptcies in recent years have included the retailers Toys ‘R’ Us (in 2017) and Sears Holding Corp. (in 2018), which led to significant job losses. Amazon’s acquisition of Whole Foods Market in 2017 and CVS Health’s purchase of Aetna in 2018 have been among the many other high-profile restructurings in recent years.
Sears filed for bankruptcy in October 2018, and its case is still pending, but on Feb. 11, 2019, the Pension Benefit Guaranty Corp. (PBGC) took responsibility as trustee for Sears’ two DB pension plans, GAO noted. PBGC and Sears agreed to end the plans as of Jan. 31, 2019 and, according to PBGC, at the time of plan termination, the two plans combined covered about 90,000 workers and retirees of Sears, Roebuck and Co. and Kmart Corp., GAO said.
In September 2005, GAO reported the terminations of pension plans by US Airways and United Airlines resulted in $9.7 billion in claims on the PBGC single-employer insurance program, and plan participants were estimated to have lost more than $5.3 billion in benefits that weren’t covered by PBGC, GAO also pointed out in the new report.
The former auto supplier Delphi, spun off by General Motors in 1999, filed for bankruptcy in October 2005, and from October 2007 to November 2008, Delphi froze benefits in five of its six pension plans, GAO noted. The “new” Delphi, which bought the “old” Delphi’s operating assets, didn’t assume sponsorship of the company’s pension plans, GAO said, pointing out that, despite efforts to keep the pension plans going, PBGC terminated all six of Delphi’s U.S. qualified DB plans in July 2009.
Although those examples “illustrate some of the potential effects of restructurings on pension benefits, less is known about the effects of corporate restructurings on pension benefits more broadly,” GAO said.
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Old 07-22-2019, 09:09 PM
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FEDEX

https://www.pionline.com/pension-fun...-pension-plans
Quote:
FedEx to expedite $1 billion to U.S. pension plans

Spoiler:
FedEx Corp., Memphis, Tenn., expects to contribute $1 billion to its U.S. pension plans during the current fiscal year ending May 31, 2020, the shipping company disclosed Tuesday in its 10-K filing with the SEC.

The contribution is voluntary, according to the filing, since the company has no minimum required contributions for fiscal year 2020. FedEx did not provide information on whether it plans to make contributions to its non-U.S. plans.

In the fiscal year ended May 31, FedEx contributed $1 billion to the U.S. plans and $91 million to the non-U.S. plans.

As of May 31, assets of its U.S. pension plans totaled $23.32 billion, while the projected benefit obligations totaled $26.554 billion, for a funding ratio of 87.8%, down from 97.3% a year earlier.

The discount rate for the U.S. pension plans as of May 31 was 3.85%, down from 4.27% a year earlier.

As of May 31, the U.S. pension plans’ actual allocation was: 51.4% fixed income, 15.9% international equities, 11.1% domestic large-cap equities, 8% global equities, 7.1% alternative investments, 3.6% domestic smidcap equities and 2.9% cash and other.

Non-U.S. pension plan assets totaled $1.578 billion, while PBO totaled $2.301 billion, for a funding ratio of 68.6%, down from 69.6% a year earlier.

The discount rate for the non-U.S. pension plans as of May 31 was 1.92%, down from 2.37% a year earlier.

As of May 31, non-U.S. pension plans’ actual allocation was: 70.2% fixed income, 17.3% global equities, 11.1% international equities and 1.4% alternative investments.
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Old 07-23-2019, 12:13 PM
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This fits in all the pension threads, really

It's some excerpts from this book:
https://amzn.to/2YgPmqY

Quote:
Downhill from Here: Retirement Insecurity in the Age of Inequality Hardcover – January 29, 2019
by Katherine S. Newman (Author)

A sharp examination of the looming financial catastrophe of retirement in America.

As millions of Baby Boomers reach their golden years, the state of retirement in America is little short of a disaster. Nearly half the households with people aged 55 and older have no retirement savings at all. The real estate crash wiped out much of the home equity that millions were counting on to support their retirement. And the typical Social Security check covers less than 40% of pre-retirement wages―a number projected to drop to under 28% within two decades. Old-age poverty, a problem we thought was solved by the New Deal, is poised for a resurgence.

With dramatic statistics and vivid portraits, acclaimed sociologist Katherine S. Newman shows that the American retirement crisis touches us all, cutting across class lines and generational divides. White-collar managers have seen retirement benefits vanish; Teamsters have had their pensions cut in half; bankrupt cities like Detroit have walked away from their commitments to municipal workers. And for Generation X, the prospects are even worse: a fifth of them expect to never be able to retire. Only the vaunted “one percent” can face retirement without fear.

Other countries are confronting similar demographic challenges, yet they have not abandoned their social contract with seniors. Downhill From Here makes it clear that America, too, can―and must―do better.
John Bury excerpts:
https://burypensions.wordpress.com/2...ill-from-here/
Quote:

Downhill From Here
Spoiler:
Among the things a day trip to Princeton brought me was this book on retirement insecurity with chapters on:

Teamsters in Trouble (Central States and MPRA)
White-Collar Damage (Verizon and United Airlines)
Municipal Blues (Detroit)
Gray Labor
Two-Tiered Agreements and the Dilemmas of Gen X
Retiring on Next to Nothing (Opelousas, LA)
Keeping the Promise (Ogden, UT)
Though heavy on the anecdotal and leaves actuaries completely blameless there were some interesting passages including one stunner from page 100.


In the last thirty years, unions have disappeared at a rapid clip and now cover only 10.7 percent of American workers, most of them in the public sector. (page 5)

The Motor Carrier Act, passed by Congress in 1980 and signed into law by Jimmy Carter, removed requirements for entry into the trucking business, paving the way for the proliferation of nonunion truck driving, increased competition, and wage cuts. (page 21)

Somewhere between one hundred fifty and two hundred plans, covering 1.5 million American workers and retirees, could run out of money in the next twenty years. (The Central States Pension Fund and the United Mine Workers, another behemoth multiemployer pension player, account for about one-third of those affected). [pages 24-5]

In 1989, management of the Central States Pension Fund was taken away from the union and placed under the authority of the Treasury Department. The Treasury didn’t actually manage the Central States pension fund itself. The department turned over those responsibilities to Wall Street titans Goldman Sachs and Norther Trust, two of the biggest money managers in the world. (page 25)

But in December, 2014, new legislation undercut those guarantees. The law, known as the Multiemployer Pension Reform Act (MPRA), reflected the conclusions of a committee housed and funded by the American Federation of Labor’s National Building Trades Council. This committee included both labor and business interests, and it was concerned about “living” companies having to shoulder the costs for pensions for “orphan” employees of firms that had gone bankrupt. Its influential report, “Solutions Not Bailouts,” offered the MPRA as a solution. (page 28)

Perhaps surprisingly, for many retired Teamsters the list of untrustworthy institutions includes the unions themselves. Once upon a time they were on the side of the working man, but their leadership today is viewed by many in the rank and file as overly compliant, possibly even treasonous. While the legendary Jimmy Hoffa Sr. is remembered with respect, his son Jimmy Hoffa Jr., the current president of the AFL-CIO, is regarded with suspicion. He was initially sympathetic to the request to cut benefits that the Central States Pension Fund sent to the Treasury, a position that stunned retirees who could not believe he was advocating against them. (pages 32-33)

The MPRA legislation overturned pension protections that had been in place for forty years, making it much easier for financially troubled retirement plans to cut back benefits. For the Teamsters, this showed that laws themselves are not dependable. They can be altered if special interests want them to be. Government is not to be trusted to stand by its own rules. (page 34)

Regulators in the Department of Labor who first acted to strip the Teamsters of control over their own pension funds are culprits in this drama as well. It was their responsibility to keep an eye on the Treasury Department, which, in turn, was supposed to exercise “good government” authority by looking out for Teamster pensioners (when their own unions were deemed too freighted with criminals to do so). Labor and Treasury were in charge for a reason: they had the knowledge, skills, and authority to steer these funds properly. It didn’t work out that way. (pages 40-41)

Verizon was one of the leaders in developing a different definition altogether starting in 2012, the firm transformed its management pension plans into insurance annuities….Verizon paid Prudential Financial to take over its pension liabilities for 41,000 management retirees, totaling $7.5 billion. For the firm’s upper management, the move made sense because it reduced volatility and relieved Verizon of the expense of paying an annual fee or premium to the Pension Benefit Guaranty Corporation. (page 57)

Insurance is uniquely opaque by design, and that’s something you learn the hard way. (page 59)

The 1978 Airline Deregulation Act thrust United into an entirely different kind of marketplace. The legislation ended government oversight of airfares and quality of service, leaving only safety under federal regulation. (page 60)

By the time the bankruptcy had been fully adjudicated, United faced a $10.2 billion shortfall in its retirement obligations. Over the objections of the unions, United received court permission to default on its four employee pension plans (for pilots, flight attendants, mechanics, and management/nonunion engineers). The ruling turned over responsibility for the plans to the PBGC, putting 134,000 United workers under the aegis of the agency. Due to the limits of the program, the PBGC paid the United retirees only $6.9 billion employees would lose the remaining $3.4 billion worth of retirement benefits. (pages 62-63)

United’s ESOP created one of the biggest employee-owned companies in the United States; it ws seen as a new opportunity for cooperation between labor and management in the airline industry. Clinton’s labor secretary, Robert Reich, was an enthusiast for this form of “rescue,” believing it would inject an element of democracy into the workplace…..by the time Ted was ready to retire, he was holding stock in a bankrupt company. It was worthless. (pages 65-66)

All across the country, city jobs were a ticket to the middle class for black men and women, as well as for the children of foreign immigrants – especially Poles – whose families settled in Detroit during and after World War II. (page 79)

Residents and nonresident commuters are obligated to pay city income tax whether or not their employer withholds it from their paychecks. But many commuters fail to do so because the state is not deducting those contributions to begin with and the city lacks the infrastructure to do so. Governor Rick Snyder would not commit the state to pay what it owed the city….To make matters much worse for municipal retirees, when the state of Michigan developed fiscal problems of its own, it looked to solve them by capturing more revenue from Detroit workers. Until 2011, public-sector pensions in Michigan were exempt from income tax. (page 93)

Accordingly, in 2005-6 Mayor Kwame Kilpatrick plunged the municipal funds into risky financial instruments knows as interest-rate swaps. Most of that investment was lost in the financial crash of 2008-9….In the end, the city paid another $85 million to the banks to get out of the deal. (page 94)

Among the most controversial provisions of the bankruptcy settlement was the requirement that retirees pay back interest earned form their optional annuity savings fund accounts. At one point, Detroit’s municipal employees had been given the opportunity to put additional money – on top of their defined benefit pensions – into these accounts and get a fixed amount each month. That amount was supposed to depend on interest earned but for a decade the city promised them more than what the interest earnings justified, leaning on the pension accounts to make good on the deal. Workers and retirees were none the wiser: they had no idea they were being overpaid, not only because they were never told, but also because the “extra” interest had been authorized by the pension board and city council under the Kilpatrick administration. The exceptionally generous payouts should have triggered more scrutiny. But no one was paying attention. (page 100)

Many retirees were under sixty-five when the Detroit bankruptcy occurred. Before the bankruptcy, these younger pensioners could count on the city’s retiree health insurance to cover them, and important benefit for anyone not yet eligible for Medicare. But as part of the cost reductions required by the bankruptcy settlement, that insurance plan was shuttered. Instead, the city provided a monthly cash benefit – $125 or $175, depending on prior earnings – that retirees could use to purchase whatever coverage they could find. (page 103)

Unless we sell our townhouse and move into something smaller. And right now, that’s not in the future. It really isn’t [possible], especially in New Jersey, to do that. (page 133)


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Old 07-30-2019, 02:26 PM
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https://www.forbes.com/sites/christi.../#24a9f3e91ada

Quote:
How The Decline Of Pensions Furthered The Racial Wealth Gap


Just as the demographics of the labor market changed, the quality of retirement benefits fell, contributing to a widening racial wealth gap
Retirement savings accounts are a poor substitute for DB pensions
Spoiler:
The gulf between those who will enjoy their golden years and those who will struggle is growing. An ever larger number of American workers will have to make large and painful cuts in their standard of living after they stop working. The retirement crisis comes on the heels of declining defined-benefit (DB) pensions. Riskier and costlier defined contribution (DC) accounts such as 401(k)s and IRAs have taken their place. At the same time, the workforce has changed as non-white workers make up an ever greater share of workers. Yet they are less likely to have a DB pension than whites do. Just as the demographics of the labor market changed, the quality of retirement benefits fell, contributing to a widening racial wealth gap .

The two trends are only correlated, overlaid by larger economic changes. The decline of union membership, greater power for CEOs and stock holders to squeeze workers, the rise of contingent workers such as temporary workers, independent contractors and contract workers, globalization, and more corporate concentration are just some of the main reasons why workers nowadays are less likely to have a DB pension than in the past. And inefficient savings incentives that handsomely reward high-income earners but offer little to lower-income ones contribute to more wealth inequality among those with retirement savings accounts than is the case for people with DB pensions.

DB pensions declined as DC accounts became more prevalent. In 1989, 39.3% of all non-retired households had a DC account and 40.0% had a DB pension. By 2016, the share with retirement accounts had risen to 53.9% and the share with DB pensions had fallen to 23.2% (see figure below). The share of households with either type of retirement plan held steady between 54% and 58% during that period. The retirement landscape changed for many workers lucky enough to have a retirement plan, making it harder for many to save for the future. But it did not expand access to retirement savings in general.


DB Pensions Declined With Retirement Savings Accounts Took Their Place.
DB Pensions Declined With Retirement Savings Accounts Took Their Place. CALCULATIONS BASED ON FEDERAL RESERVE'S SURVEY OF CONSUMER FINANCES.
Retirement savings accounts are a poor substitute for DB pensions . Because they rely on employers voluntarily offering them and workers voluntarily participating in them, they often fall short in helping workers get close to a secure retirement. Workers often do not participate in them, contribute too little to them, experience too much financial risks with them and withdraw too much from them during their working years. Workers after all have to make all of the complex financial decisions related to such accounts, while also dealing with the challenges of low wage growth and increasing income instability. In the end, fewer workers than in the past can look forward to a secure retirement.

While ineffective and unstable retirement accounts took the place of stable, predictable pensions, the workforce also changed. Importantly, the share of white households among non-retirees fell from 72.8% in 1989 to 61.6% in 2016.

Nonwhite households are less likely to have retirement benefits to begin with and when they do, they are more likely retirement savings accounts than DB pensions. This follows in part from nonwhites working in more precarious jobs as well as facing more occupational segregation and discrimination.

The combination of changing retirement benefits and changing labor market demographics has then contributed to increasing wealth inequality by race. Thanks to researchers at the Federal Reserve, especially John Sabelhaus and Alice Henrique Volz, we now have measures for the implicit wealth of people’s DB pensions. Including this measure in total household wealth, white households had more than six times the total wealth of non-whites -- $168,900 compared to $26,528 (in 2016 dollars) – from 2010 to 2016. This gap has grown, even as both whites and non-whites alike lost wealth in the aftermath of the Great Recession. The losses were just larger among non-whites than among whites.

The shifting retirement landscape is part of the story of the rising racial wealth gap. Non-white households, especially African-Americans and Latinx households, are much less likely to have a retirement plan or a DB pension than is the case for whites. From 2010 to 2016, only 21.6% of nonwhite non-retirees had a DB pension, compared to 35.4% of whites, as calculations on Fed data show. And, 25.4% of nonwhites had a retirement savings account then, while 36.0% of whites did. Whites are more likely to have retirement benefits in some form than nonwhites and when they do, they are more likely than nonwhites to have DB pensions.

Moreover, wealth inequality is greater among those with just a DC account than among those with a DB pension, even though it is lower than among those without any retirement benefits. From 2010 to 2016, for instance, the top 1% of households without either retirement savings accounts or DB pensions owned 60.2% of all wealth owned by non-retired households without retirement benefits (see figure below). In comparison, the top 1% of households with only a retirement account owned 35.2% of that group’s wealth. And the top 1% of households with a DB pension owned only 15.8% of the wealth of all households with a DB pension (see figure below). DB pensions equalize wealth more than DC accounts do, but fewer non-whites than whites benefit from either DC accounts or DB pensions.

Wealth Inequality is Greater Among Households With Only Retirement Accounts Than Among Those With DB Pensions.
Wealth Inequality is Greater Among Households With Only Retirement Accounts Than Among Those With DB Pensions. CALCULATIONS BASED ON FEDERAL RESERVE'S SURVEY OF CONSUMER FINANCES
It will take a lot of effort to shrink the massive racial wealth gap. It has increased as retirement savings accounts took the place of DB pensions without measurably increasing the share of households with any retirement benefits. Increasing access to retirement benefits is thus an important first step. Making those retirement benefits, especially retirement savings accounts, work a lot better than they do now will have to be second key step towards building wealth for nonwhite households.


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Old 07-31-2019, 04:50 PM
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This one is making me smile. It's nice to have a good pensions-related story at least

https://www.theguardian.com/music/20...rolling-stones

Quote:
Jumping Jack cash: how young Mick Jagger planned his pension
The young Rolling Stone had more sympathy for his bus pass than the devil, says his former accountant
Spoiler:
To his fans, he was a young man focused on sex, drugs and rock’n’roll. But in his mid-20s Mick Jagger had other, rather more sedate, things on his mind, it has been claimed: a pension plan for his retirement.

The Rolling Stones star turned 76 last week and appears to have no plans to hang up his microphone. But when he was young he found the idea that he would still be performing after the age of 60 preposterous, and was keen to prepare his finances for his twilight years, according to the man who was his accountant at the time.

“We started chatting, started talking about pensions. [Mick] said, ‘after all, Laurence, I’m not going to be singing rock’n’roll when I’m 60’,” Laurence Myers, an accountant who set up a music business, told the Observer. “We roared. It was just a ridiculous thought that a young man would be singing rock’n’roll when he was 60. Needless to say, he carried on beyond 60 and he created his own pension.”


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Myers recalled that Jagger, who studied at the London School of Economics, had also considered a career in insurance. He was “very bright, and very interested in business” said Myers. “The Rolling Stones became our client for years and, for eight months, had their offices in my offices, which was a very exciting time,” he added.

Jagger, who performed on stage last month for the first time since undergoing heart surgery this year, now has an estimated fortune of 260m.

The Stones will be among stars appearing in a memoir that Myers, now 82, has just finished. Out in October and titled Hunky Dory (Who Knew?), it will offer an insider’s view of the music industry’s golden age, focusing on the 1960s and 1970s. Myers signed the little-known David Bowie when no one else was interested and worked alongside the renowned record producer Mickie Most with the Animals, Donovan, Jeff Beck and Lulu. He masterminded deals, stopped record publishers exploiting songwriters, sorted contracts, and managed the New Seekers and the Tremeloes, among others.

Laurence Myers, accountant to 1960s and 1970s pop stars, whose memoir comes out in October.
Facebook Twitter Pinterest Laurence Myers, accountant to 1960s and 1970s pop stars, whose memoir comes out in October. Photograph: Tom Lewis Russell
When the Stones first came to him, they were touring in a Transit van. He said: “In those days, you got cheques back with the bank statements … They were only tiny little tours, but [the cheques] were signed by the Rolling Stones. When you did the audit, there was no need to keep the cheques.” He threw them away, joking now about how much they would be worth today. Referring to his book’s title, he said: “Who knew?”

He also recalled signing Bowie and becoming his early manager when the future star was struggling: “Nobody wanted to sign him.”

He described him as a quiet man: “You would have thought he was an insurance clerk. You would not have thought he was a rock star. It was just when he went on stage.”

Myers saw his potential, investing his own money in a Bowie promo disc that led to an RCA deal and albums such as Hunky Dory and Ziggy Stardust: “We pressed 500 copies of the Bowie promo. One sold recently for $10,000. I threw them away. Who knew?”

Angie Bowie, the star’s first wife, has endorsed the book, saying: “Laurence took a big chance on David when the record business was not interested in him. David was always grateful.”

When Rod Stewart was still up and coming, he would hang around Myers’s office every Friday, waiting to be paid for his latest gig with Jeff Beck.

Myers said: “I was Jeff Beck’s accountant. Rod Stewart was his singer. Each week, Jeff would give me money to pay [his musicians] because it was pay as you earn. Depending on how many gigs, they earned different amounts. Rod would be hanging around the office, sprawling all over. We had a very attractive receptionist. Rod would be there, chatting her up.

“But we were an accountancy office and my partner said, ‘I’ve got this shoe manufacturer coming up, who’s that guy lying around the office?’ I went out and said to Rod, ‘I’m very sorry, but you can’t come here any more. Phone me and I’ll tell you when I’ve got your money ready.’ I threw him out of the office.”

He added that everybody knew Stewart was going to be something special, and they were charmed by him, including the receptionist.


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Old 08-23-2019, 10:18 AM
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WALGREENS

https://www.ai-cio.com/news/walgreen...mismanagement/

Quote:
Walgreens Sued for $300 Million over Alleged 401(k) Mismanagement
Suit says poorly performing funds were ‘devastating’ to retirement accounts.


Spoiler:
Walgreen Co. is being sued for $300 million by a group of its 401(k) plan participants who allege that the company breached its fiduciary duties by adding to the plan a group of “poorly performing funds” and keeping them for nearly a decade despite their lackluster returns.

The complaint, which was filed in the US District Court of Northern Illinois, alleges Walgreens failed to remove from its employee retirement plan a suite of 10 Northern Trust target retirement date funds that underperformed their investment benchmarks and other similar collective investment funds significantly for nearly a decade. The lawsuit alleges that the Walgreen Profit-Sharing Retirement Plan has cost its employees millions of dollars in retirement savings.

“Walgreen’s decision to select the Northern Trust Funds resulted in a swift and devastating blow to participants’ retirement accounts,” said the complaint, which also said that during the first two years the plan offered the funds, they underperformed relative to the comparator funds by more than $200 million.

“To this day, the investment performance of each of the 10 Northern Trust Funds has continued its downward spiral to the bottom of their respective Morningstar Category for the preceding three-and five-year periods,” said the complaint. “Most of the Northern Trust Funds have performed worse than between 70% and 95% of the hundreds of funds within their respective Morningstar categories for the past three-year and five-year periods.”

According to law firm Sanford Heisler Sharp, which is representing the plaintiffs, the plan participants invested more than $3 billion in the 10 target retirement date funds, which made up nearly one-third of the plan’s assets.

“ERISA’s fiduciary standards are strict and exacting,” David Sanford, counsel for the plaintiffs, said in a statement. “Since 2013, Walgreen has offered its employees these poor-performing target retirement date options which have been highly detrimental to the retirement savings of plan participants. Walgreen and the plan committees should be held to the highest standard as fiduciaries.”

The complaint also said that Walgreen should have known the funds were underperforming, but didn’t because the company failed to prudently monitor the investment performance of the plan options as required by ERISA.

“A reasonable investigation by the Walgreen defendants would have revealed the funds’ chronic underperformance and prompted Walgreen to remove and replace them with superior options,” said the complaint.

The plaintiffs are seeking approximately $300 million for financial losses to plan participants and beneficiaries, divestiture of imprudent investments, and the removal of the fiduciaries who the suit alleges violated their duties under ERISA.



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