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Pimco's Prediction For Pension Plans: "Pain"

Tyler Durden's picture

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Wed, 10/12/2011 - 11:56 | 1765993 GeneMarchbanks
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Pensioners please die faster we have no plan for you. Sincerely Timmy G.

We have to start a new Ponzi and quick...

Wed, 10/12/2011 - 11:57 | 1766017 SheepDog-One
SheepDog-One's picture

Nevermind the pensioners...imagine when the Uber Congress this month cuts $400 billion in 'costs' to food stamps, unemployment, and general welfare! Then we'll see the streets occupied with rioters.

Wed, 10/12/2011 - 12:36 | 1766209 tickhound
tickhound's picture

The Squid, Bank of Amurikkka, JPMorgue, ShittyBank, UnTrust, and HSBC-FU declare NYPD pension plans to be safest in the country.  Brown-shirts remain loyal... for now.

Wed, 10/12/2011 - 16:43 | 1767090 trav7777
trav7777's picture

does the idiot who wrote this article ACTUALLY believe the government could pay the coupon that the retirees seem to believe they're entitled to?

Oh gee, BB bought down the curve, and DROVE UP THE BONDS' price!  The revenue doesn't exist to pay a higher coupon

Wed, 10/12/2011 - 12:06 | 1766058 Nascent_Variable
Nascent_Variable's picture

Long cat food and generic medications.

Wed, 10/12/2011 - 12:27 | 1766162 scatterbrains
scatterbrains's picture

long fungi and beechnuts bitches

Wed, 10/12/2011 - 12:55 | 1766283 Bicycle Repairman
Bicycle Repairman's picture

The discount factor in pensions is based on two things: interest rate and mortality rate.  Interest rates are going in the wrong direction.  Hmmmmmm.........

Wed, 10/12/2011 - 12:35 | 1766207 dirtbagger
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Fasting growing market sector in US - assisted suicides

Wed, 10/12/2011 - 12:37 | 1766211 slewie the pi-rat
slewie the pi-rat's picture

need help?

Wed, 10/12/2011 - 12:35 | 1766208 slewie the pi-rat
slewie the pi-rat's picture


i'm thinking of canning cats

bong city, BiCheZ!


Wed, 10/12/2011 - 14:38 | 1766629 Haddock
Haddock's picture

Exactly. The pension managers (remember Leo?) can fudge it any way they want, but the demographics are too powerful - there's not enough to go round for the boomers to enjoy the retirements they promised themselves but passed the bill down the line.


Wed, 10/12/2011 - 11:55 | 1766000 SheepDog-One
SheepDog-One's picture

Rocky III sucked. And times in '82 we're no worse than today, we just didnt have the outright massive lying and manipulation. In '82 did we have ZIRP for 3 years? QE trillions? Rampant bond manipulation thru primary dealers? $15 trillion debt? 20%+ real unemployment? No.

Wed, 10/12/2011 - 11:59 | 1766023 bigdumbnugly
bigdumbnugly's picture

i pity the fool who thought anything after Rocky I was worth the price of admission.

Wed, 10/12/2011 - 12:04 | 1766051 zorba THE GREEK
zorba THE GREEK's picture

BD&U, I would go see a sequel to Rambo, where he goes after the bankers who destroyed his pension plan.

Wed, 10/12/2011 - 14:19 | 1766566 MachoMan
MachoMan's picture

Tie it in with military retirement and you're golden.  You'll just need to have a few screens of "this film is dedicated to the great people of ___________________________" (insert whatever country is going to be officially blamed for destroying a couple world wide landmarks, symbols of the country, and killing a few thousand folks...  and in which we subsequently invade).  Bet he felt like an asshole after rambo 3.

Wed, 10/12/2011 - 12:40 | 1766221 Freddie
Freddie's picture

I pity and really loathe dumb fuxx who watch TV or anything from Hollywood because they are supporting their overlords and enjoy being little serfs. 

I might pay to see Clubber Lang jibber jabber and break The Bernank's f**king jaw.

Wed, 10/12/2011 - 12:28 | 1766169 duo
duo's picture

No, we had high interest rates which attracted the capital that funded the PC and semiconductor revolution...and Max Headroom...and piles of coke.

Wed, 10/12/2011 - 12:07 | 1766037 SheepDog-One
SheepDog-One's picture

SPX 1212 peaking out on the range on lowest range volume....well it needs to pop CONVINCINGLY over that on volume quick or its 'fake rally over' time.

Wed, 10/12/2011 - 12:09 | 1766071 firstdivision
firstdivision's picture

Look at the veloicy of that 10 year...after Gross goes all in on longer duration.

Wed, 10/12/2011 - 12:14 | 1766094 SheepDog-One
SheepDog-One's picture

Well good luck to Gross and the primary dealers on their Tbond purchases, I wouldnt touch that crap myself. Banksters and club members sloshing fake money around...big deal.

Wed, 10/12/2011 - 12:19 | 1766109 afdestruction
afdestruction's picture

The slow stochastic is at 95.49, almost maxed out. Expect another >75-100 point drop soon like the last several times this maxed out.


Wed, 10/12/2011 - 12:27 | 1766161 SheepDog-One
SheepDog-One's picture

One of these times, it wont come back!

Wed, 10/12/2011 - 12:00 | 1766029 zorba THE GREEK
zorba THE GREEK's picture

Does this mean my 201K is now a 101 K soon to be a 51K?

Wed, 10/12/2011 - 12:03 | 1766043 SheepDog-One
SheepDog-One's picture

.004.1K. The FED moves the decimal point to the right, everyone else moves their decimal point to the left.

Wed, 10/12/2011 - 12:00 | 1766030 duckhook
duckhook's picture

Anyone who can add can see that that the implied rate of return is irrational.Thst will mean only one thing,that the states and municplaities are even mre underfunded then they assume and that the minicpalities are going to have to raise taxes and cut services consistently into the future.or they are going to have to default on their obligations. This does not take rocket science and it is inevitable

Wed, 10/12/2011 - 12:34 | 1766085 Vincent Vega
Vincent Vega's picture

Bingo! But try explaining that to J6P or many Fortune 500 employee and their eyes glaze over. I was making this same point to a close friend last night. He's been with the same company 32 years and is 3 years to retirement. He can not fathom any potential problem.

Wed, 10/12/2011 - 12:47 | 1766257 Uncle Sam
Uncle Sam's picture

Eventually, according to accepted accounting math, every municipality will eventually have only one employee, whose job it is to disburse pension checks to former employees (the Schwarzenegger interview is only background fluff, get to the part about the municipalities):


Mededith may be a little behind the time curve, but, without bailouts, she's absolutely right.

France is now, through a new state bank, giving money to municipalities and businesses that need supporting. My guess is that they're printing their own Euros. The Irish did it, so legally everyone else can do it, too:


This is the global financial system of the future - Central Banks will print unlimited amounts of fiat to pay everything, without any capital reserves.

So the question is, how far can the world go, printing unlimited amounts of fiat out of thin air, until the system breaks? Any investing strategy is completely dependent on this premise.

Throw in the fact that nowhere in the world is any legal/regulating authority chasing high level financial fraud.

If the "NWO" is the replacement of existing governments with a new, global centralized one, isn't the complete control over the world's financial systems by unregulated, non-democratic Central Banks, with every country under their thumb, the ultimate proof? The "coup" has already taken place.

And to think, it all started with Alan Greenspan and the complicity of the American government:


If you're short of time, go straight to 18 minutes in.

Interesting that no political candidate - anywhere in the world, in any country - is pushing for legal accountability of high level financial fraud. We already have the "NWO". The question now is not how to prevent it, but how to reverse it.

Wed, 10/12/2011 - 13:00 | 1766298 Bicycle Repairman
Bicycle Repairman's picture

If you've ever modeled a pension plan you know that it's all about the assumed interest rate.  Increasing contributions is like digging with a teaspoon.  If you want to cut benefits, you have to slash.  Interest rates must rise.  ZIRP must be ended now.

Wed, 10/12/2011 - 12:03 | 1766046 dick cheneys ghost
dick cheneys ghost's picture

"Prepare to write another bigger one every year for the next 30 years, even if public pension fund investments match historic indexes of the past 30 years —  which would put the Dow above 65,000 — and managers actually earn what they promise."



Wed, 10/12/2011 - 12:03 | 1766047 samsara
samsara's picture

I am more concerned about the return of my money than the return on my money.

 --Mark Twain

Wed, 10/12/2011 - 12:07 | 1766062 Corn1945
Corn1945's picture

Ben Bernanke doesn't give a fuck about your pension or retirement. He doesn't work for you.

Wed, 10/12/2011 - 12:10 | 1766075 SheepDog-One
SheepDog-One's picture

Thats right. Neither do any of the politicians.

Wed, 10/12/2011 - 12:10 | 1766078 Logans_Run
Logans_Run's picture

The flattening of the curve is also putting the hurt on financial services companies that sell annuity products. 3rd quarter results will not be good.

Wed, 10/12/2011 - 12:13 | 1766083 Smiddywesson
Smiddywesson's picture


Wed, 10/12/2011 - 12:16 | 1766098 buzzsaw99
buzzsaw99's picture

I predict Pimpco's fund managers will get rich no matter what happens.

Wed, 10/12/2011 - 12:18 | 1766107 riley martini
riley martini's picture

 He didn't include the lost from fraud and theft by the Corporate-Government Fascist . Any pension plan left solvent after the Paulson panick are allowed to amortize their losses for up to 30 years . Anyone in a pension plan could be paying for losses for years before benefits can be increased if the plan survives . An act of congress .

Wed, 10/12/2011 - 12:22 | 1766131 ZeroPoint
ZeroPoint's picture

You can extend this over to 401ks too. Doesn't matter how many shares you own, it will never be enough to live without a job.

Wed, 10/12/2011 - 12:25 | 1766149 SheepDog-One
SheepDog-One's picture

Step right up! Pin ya retirement pension monies to high risk equities! Everyones a WINNA! 

No, really...what could possibly go wrong?

Wed, 10/12/2011 - 12:41 | 1766227 BadKiTTy
BadKiTTy's picture

11% returns...... No problemo (nominal of course). With inflation at 15-20% we would be about where we are today.

Now.... Where the f@&k did I put that paddle??


Wed, 10/12/2011 - 12:46 | 1766249 Blank Reg
Blank Reg's picture

"pensioners who hope to see their life savings generate some...any... return (on capital, or of capital) in their lifetime, to simply skip this article and read some of our cheerier fare"

Uh, guys? You don't HAVE any "cheerier fare".

Wed, 10/12/2011 - 12:53 | 1766275 slewie the pi-rat
slewie the pi-rat's picture

we are freaking doomed, BiCheZ! 

feel better?

Wed, 10/12/2011 - 13:11 | 1766293 Blank Reg
Blank Reg's picture

There! See what I mean? Come on. Buck up little troopers. Hey, I know how we can save the country. Let's put on a show! We have some costumes in the barn, and my dad knows music.....

Wed, 10/12/2011 - 13:16 | 1766352 slewie the pi-rat
slewie the pi-rat's picture

i know!

pain is so commonplace, you'd think we'd be able to see it coming, by now

when mars rescues us, they will help us understand that we are living in a pain factory

take a food chain to lunch, BiCheZ!

Wed, 10/12/2011 - 12:58 | 1766289 Dingleberry
Dingleberry's picture

Step 1. Send pension money to Wall Street

Step 2. Banks literally steal from bid/ask spreads, currency redemptions, shorting their own endoresed investments, etc.

Step 3. Pension fund loses money and/or collapses


What's the problem?  The banksters got away with robbing the average Joe again.  As if that matters anymore......

Wed, 10/12/2011 - 13:03 | 1766313 The Alarmist
The Alarmist's picture

Considering I finished Q3 up 56% on the long- dated zeros that are 25% of the LDI part of my pension scheme's portfolio, 11% is what passes for conservative these days.

Wed, 10/12/2011 - 13:07 | 1766326 the grateful un...
the grateful unemployed's picture

Recently CaPers rate of return was projected at around 4.75%? Recall that when they proposed lowering it 1/4% Wall Street had a seizure. (the audience in this piece is the investment board of these funds, and who are they? The elected CaPers board for instance, gives almost no pushback, even when Goldman was nailed for frontrunning them for a few million. I guess its like everything else, we have a voice, but no one listens.) In other states its worse, in AZ the pension fund is completely opaque. They raised public employee contributions when the fund lost money in the stock market.(referred to me anecdotally by a relative who works for AZ) In CA fund shortfalls are addressed by the state.

and this is the rub, because the states are not in good enough fiscal shape to handle that. the incumbency is of course deeply dependent on these blue state voters, and their pension funds. red states much less so, which is why they act so moral about the debt ceiling and all the market bailouts. a lot of it is simple politics, and Geo Bush proved you could move the red state voters as a monolithic block.

who is Pimco talking to here? Any pension fund managers, which means Wall Street types, who are over leveraged in their pension fund investments. This is shorthand for you better be a little less leveraged and propose some austerity measures if you're in this group. if bonds are less attractive then fund buying should go into equities, or risk assets. The Texas Employees fund bought how much gold?

and if the Fed is printing money, equities should get an (inflationary) asset lift from that policy. Meanwhile Obama has to protect what few constituents he has left, most of them on Wall Street, and not part of the protest.

in this less than conservative world we live in, some retirees are using their retirement check to pay a mortgage, (while home asset prices remain artificially high).

should we have an Argentine like crash, where the bond holders (in that instance widows and orphans in Italy) are haircut for 50% and the stock market is made whole again, who would you want to be. You buy risk assets, and when the market crashes you buy some more, and throw your bond certificates in the fire.

Pimco can preach all they want, that's the only way to game it. the chart proves it.

Wed, 10/12/2011 - 13:27 | 1766378 twotraps
twotraps's picture

funny that all that pension fund math makes sense....interest rates and risk asset returns, over time etc....all this based on markets that are barely recognizeable.  ZIRP??  Insolvent banks, contagion in Europe??  Oh...and the mkt is up another 150 today.  I get it.

Wed, 10/12/2011 - 15:01 | 1766730 beaker
beaker's picture

There is only one way to fix these pension plans.  Present value these benefits, write a check for the hit, and shut the plan down. 

Wed, 10/12/2011 - 15:27 | 1766848 Alex Kintner
Alex Kintner's picture

Converting all retirees to Soylent Green solves all the deficient problems by 2013 -- without gutting Soiled Security.

Side benefit -- Green Brick Oven Biscuits with Tea are delicious.

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