Union Pension Underfunding Time-Bomb Soars By 75% In One Year, Nears $400 Billion

Tyler Durden's picture

The shortfall in US labor union pension funds is huge and growing rapidly. The latest data, from 2009, from the PBGC showed that these multi-employer plans were 48% underfunded with $331bn of assets to support $686bn of liabilities - and it has hardly been a good ride for those asset values since then. Critically, as the FT notes today, recent changes by FASB has enabled Credit Suisse to estimate shortfalls more accurately and it paints an ugly picture. The critical difference between reality and what is being reported is the ability for firms to use actuarial 'facts' to discount liabilities or compound assets at a 7.5% annual growth rate - as opposed to the sad reality of a financially repressed investing environment where returns swing from +20% to -20% in a flash forcing all funds into market timers and not long-term buy-and-hold growth players. These multi-employer pension schemes cover over 10 million people concentrated in industries with highly unionized workforces such as construction, transport, retail and hospitality but of the shortfall only $43bn lies with firms of the S&P 500 - leaving the bulk of the burden on small- and medium-sized businesses once again. It seems the number and size of unfunded (implicitly government) liabilities continues to rise or does this force pensions to follow Ben's path and increase exposure to hedge funds (which are underperforming in this serene rally so far this year) in an effort to meet these hurdle rates? Either way it appears this under-appreciated drag on the real-economy as one after another small-, medium-, and large- (Safeway faces shortfalls larger than its market cap) businesses will need to eat into earnings to fund this shortfall.


Source: FT

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Mr Lennon Hendrix's picture

Sorry, Boomers, but you will never retire.


And neither will anybody else. 

Oh regional Indian's picture

Guyz. Guyz. Gurlz.

Look, they don't plan to fix this thing. never. Cannot actually. It's a mathematical certainity, BUST.

This is all pre BUST fun and games. Squeeze the already miserable. 

Watching a fascinating documentary, Life of John D Rockerfeller. Standard Oil, THE oil company of any record really, till it was split up right!!!), monster. He was cold, christian bastard.

I think that energy pervaded oil forever. Cancerous, greedy, perpetually demanding growth (he took out massive loans to start his refinery).

America is built on Oil+Slaves. Now it's over.

We are just watchiing the "fighting over scraps" part.

I say let's be proactive at the Economic rug-pulling. Detach. 

Till then, we can watch this crazy verticalizing graphs and shrug in wonder at the audacity of it all. If you can, watch any clip of Senator Prescott Bush, recently of trading with the Enemy fame.

The swagger is telling. And this was then. In the 50's.



Big Slick's picture

In a recent Chris Martenson self-interview (excellent listen... link below), Chris wondered why there is not more of a backlash against the policies of US Treasury and the Fed by the people responsible for pensions.  Perhaps the fact that only $43B of the $360B shortfall (a little over 10%) is from S&P500 companies means that those who should be the most concerned (i.e. mid and small company concerns) have too small a voice.  Those with the larger voice are in "better" shape (for now).  

This seems to be a broad trend.  Those being abused the most are small or scattered interests.  No bully pulpit.





Oh regional Indian's picture

The Rise and the Rise of the Rockerfellers:



This is why, most of the world is in perpetual debt slavery. And this is the sanitized, History channel version at that.


Sudden Debt's picture

Need... More... Money.... Must... Have... All....

LongBalls's picture

They will create at much as they need. It's called the cashless society. No fear of any valuation if the sheep can't extract it right?

12ToothAssassin's picture

My question in the "Must have it all" money game is: What exactly is the end game? Lets say that someone in fact got all the money in the entire world and 'won' the game.


Then what?

squib's picture

The rest of the solar system. silly.

LongBalls's picture

It's about population control. This is what cements their favor.

Bobbyrib's picture

Tne Neo-Cons would fold up shop and retire?

neidermeyer's picture

They'll just change the assumptions to indicate an expected 12% return on funds they hold.

 The funny thing is they will be underestimating the returns over a 6 year span ,, they won't double in 6 years ... after year 2 they'll double each quarter... We're all billionaires in Obama's world ... All hail Obama.

MisterMousePotato's picture

You wrote: America is built on ... Slaves. Now it's over.

This is not true. This is a canard, generally of the left, and specifically of the race mongers.

In fact, America, both North and South, but especially the South, was utterly destroyed economically by the Civil War. The cotton was burned and gone. The cotton and rice fields burned and fallow. The money became worthless, etc. Economically, the country, especially the South, was reduced, economically, to a state resembling modern day Greece or Hungary.

Any wealth attributable to slavery was completely and utterly dissipated and destroyed by the War of Northern Aggression.

Any and all wealth thereafter obviously had nothing to do with slavery.

Buck Johnson's picture

Your correct, we are fighting over the scraps.  People never ask themselves why is so much of our security designed to watch americans and detain them?  And it's because when the day comes when the checks don't go out and the banks are closed and hyperinflation is setting in, people will go insane.  They need these precautions in order to protect the elite from the masses that will demand answers.

aerojet's picture

We should be encouraging those people to smoke, and drink more and buy really fast sports cars and motorcycles.

kekekekekekeke's picture

taking more 'scripts and shoveling crap in yr mouth is so much easier tho

No Bid's picture

according to our glorious leader the massive drop in the labor participation rate is from boomers retiring.

Vampyroteuthis infernalis's picture

Boomers spent (mostly wasted) their retirement, their children's inheritance and their grandchildren's inheritance. Why should they have a retirement? If they want any reasonable quality of life when they are too old to work, the Boomers are going to have to turn over the reins of industry and business to Gen X & Y.

Narcissism has no ends.

banksterhater's picture

Boomers proved they are the multigenerational ASSHOLES.

12ToothAssassin's picture

"Hypocrasy knows no bounds" 

- Doc Holliday in Tombstone

aerojet's picture

It may well be--I know of quite a few people who have retired recently.

Sudden Debt's picture

They'll just raise the retirement age to 120 years and all is fixed!

Kayman's picture

120 years today is the equivalent of the 65 years, when public pensions first started. So... old is new again...

JPM Hater001's picture

They wont have to worry about retiring...They will probably be killed in the riots.

GeezerGeek's picture

Are you saying that those boomers who avoided getting killed in Viet Nam as young men will now get a chance to die on the streets of some American city? Rather like a set of bookends, for those who know what bookends are.

Vampyroteuthis infernalis's picture

Most of the Boomers who are destroying the economy were the wealthy, spoiled lot who never went to Vietnam. There are nooses waiting for these individuals.

12ToothAssassin's picture

I can tie a good noose in less than a minute guaranteed. Im practiced in the art.

JW n FL's picture



I cant tie shit! but I got Gas!! and LOVE a GOOD FIRE!! they can run around on fire! it will make for a great video.. take 5 or 6 of them.. put them in a fenced area.. pour gas all over them and see who wins the race!

What is it that Mr CNBC always says? BOOYAH!

neidermeyer's picture

Noose? Why bother ... just get some of those giant 36" long plastic cable ties and give it a good yank... Then you can take others suggestions about FIRE ... get a twofer!



banksterhater's picture

WRONG. They invented debt & consume and took it to the extreme. I have no sympathy for the greedy idiots.

Ralph Spoilsport's picture

Yeah GeezerGeek, the current Gestalt on ZH dictates that all the financial problems in the US are caused by the Boomers.

FubarNation's picture

Retirement is a fairly new 'concept' for the planet.  It makes one wonder if the scam will hold up for another generation or not.


Me thinks it is over.

aerojet's picture

The more time passes, the more I realize that retirement is a "sold to you" concept to make money for banksters. 

Marco's picture

Self funded retirement outside of the family unit is a new concept ... retirement not so much. we stopped sending them out into the wilderness a while ago already. It's not a scam either, the pretense of perpetual economic growth was a scam ... not the inherent idea of saving for your retirement.

Bicycle Repairman's picture

If the Boomers don't retire, when will you get that corner office?

Just Observing's picture

Hate to burst your bubble, Lennon, but we just have retired.....me.....63, wife 60.  Between her State pension, and my social security, we have plenty.  If she sees her SS, we'll simply have more money than we know what to do with......

BUT, let's assume all of that goes away.....and I have plan B for that distinct possibility.

House/land is paid for. Property tax/insurance less than 2k/yr.  Bought a new car (cash) last year, and my truck, 2007, is paid for.  No water/sewer bills (private system), power company actually pays us for our solar production ( enough that it offsets the small propane bill...wood is our primary source of heat ) raise most of our own food including beef, chicken/eggs, pork, catfish, and a large garden every year. Got YEARS of home canned and commercial foods stored away.

Got a guy paying us 1500/mo on a 15yr mortgage for property we sold him, ( and just sock away right now), got 100+k in local banks (non-IRA), and sitting on over 200oz gold and 6,000oz silver.  (500k+ today's melt price)

SO, while I'd agree, the average "boomer" is up shit creek without a paddle, it certainly isn't the case at my house.

Bobbyrib's picture

Congrats on being one of the only people in your generation to plan for retirement.

WillyGroper's picture

this one just did & early to boot. saw the paradigm shift during Bonzo's reign & planned accordingly. no one can tell the future, but if it's based on the thievery i've witnessted since the 80's, i'll take my chances while there's still a pension to get.

vmromk's picture



To shit on Bernanke's head and wipe my ass with his beard.

sessinpo's picture

vmromk          2327782



To shit on Bernanke's head and wipe my ass with his beard.



You know that is really disgusting. Aren't you afraid of what might be hiding in his beard?

LetThemEatRand's picture

Two Bernankes.  One Cup.

Financial Cold Fusion's picture

Keep yields slammed to juice other asset classes and this is what you get.  Unfortunately, equities and commodities aren't the bulk of what many of these pension funds own.  Good luck finding a way to "grow" you way out of this...

LawsofPhysics's picture

And, boom goes the dynamite?  Same as it ever was, the pedulum will swing.

misterc's picture

No Pension for YOU!