Tuesday, March 31, 2009

Pension Insurer Shifted to Stocks

The Boston Globe wrote Pension insurer shifted to stocks. The Pension Benefit Guaranty Corporation is an independent US government agency that pays retirees if their pension plans are terminated. It's not tax payer funded but gets money from premiums of pension plans it insures. It of course invests it's assets but mostly in less risky investments and only 15-25% in stocks.

Until Charles E.F. Millard took over the agency in December 2007. "Under Millard's strategy, the pension agency was directed to invest 55% of its funds in stocks and real estate. That included 20% in US stocks, 19% in foreign stocks, 6% in what the agency's records term 'emerging market' stocks, 5% in private real estate and 5% in private equity firms."

"The agency refused to say how much of the new investment strategy has been implemented or how the fund has fared during the downturn. The agency would only say that its fund was down 6.5 percent - and all of its stock-related investments were down 23 percent - as of last Sept. 30, the end of its fiscal year. But that was before most of the recent stock market decline and just before the investment switch was scheduled to begin in earnest."

A point to note is that exactly when there is such a downturn is when this agency will need the funds to payout.

Remember when the Republicans wanted to "privatize social security"?

No comments: