How turmoil at a $94bn US pension fund hit home for Ohio teachers

[Ualtar]

I’m growing increasingly concerned about the state of our pensions, especially when we have little to no control over them, and it feels like those in charge are making poor decisions that could jeopardize the future of many retirees, both current and future.

We've already seen similar scandals reported in the UK and now in the US. Will Ireland be any different, or are we heading down the same path?

I’ve attached an article from the Financial Times that highlights the turmoil at a $94bn US pension fund, which I saved as a PDF for anyone interested. Since it’s behind a paywall, I thought it might be helpful to share it here so everyone can access it.

Cheers!

 

[cremeegg]

It appears from the article that the Ohio teachers pension fund is essentially a 'private' fund in that the only assets available to pay teachers are the assets of the fund.

In Ireland teachers and other public servants pensions are a liability of the state and as such the situation outlined cannot happen.

The Waterford Crystal pension affair was similar, to the one in the article, where the assets available did not support the defined benefits promised. Perhaps someone more knowledgeable will be able to explain how that turned out.

 

[kickstart]

I’m growing increasingly concerned about the state of our pensions, especially when we have little to no control over them, and it feels like those in charge are making poor decisions that could jeopardize the future of many retirees, both current and future.

We've already seen similar scandals reported in the UK and now in the US. Will Ireland be any different, or are we heading down the same path?

The pension fund you're referring to is (as I understand it) mostly defined benefit based. The inability of any fund to keep to promises of benefits in the future based on unknown future performance is well known. If you have a defined contribution pension, then this uncertainty doesn't apply to you. I'm not saying don't worry it's all fine if you've a DC pension, but at least you have more clarity. I would be interested to hear from others with more insight into the legislation that came in after the Waterford crystal DB pension debacle if they think there is any more practical protection in place these days for DB funds.

 

[Fortune]

The Waterford Crystal pension affair was similar, to the one in the article, where the assets available did not support the defined benefits promised. Perhaps someone more knowledgeable will be able to explain how that turned out.

Scheme was wound up, and transfer values were paid. Transfer values were far smaller than would be needed to pay the benefits promised, and the former members were dumped into whatever DC arrangements they could get for themselves. Eventually, through the European courts, additional funds were paid to the former members (still nowhere near what is/was needed to provide the pensions promised).

How did it turn out? @#*"!

I believe the only tiny sliver of a silver lining is that the government were forced to enact legislation to protect pension scheme members.