ZIRP Strikes Again: Pension Under-Funding For S&P 500 Companies Hits Record

Tyler Durden's picture


The public pension and retirement 'schemes' are in considerable trouble (as we noted here and here) and now, according to a recent S&P study, private companies are at record levels of pension under-funding. Fiscal 2011 shows that the under-funded level for S&P 500 companies' defined pensions reached an epic $354.7 billion - an increase of over $100 billion from 2010 and surpassing the 2008 record of $308.4 billion - and OPEB under-funding reached $223.4 billion. An aggregate $578 billion or 29.5% underfunding or the $1.96 trillion in obligations is increasing as the rates of return are reduced thanks to yet more unintended consequences of the Fed's ZIRP and perhaps most worrying is there comment that "The American dream of a golden retirement for baby boomers is quickly dissipating; plans have been reduced and the burden shifted with future retirees needing to save more for their retirement.  For many baby-boomers it may already be too late to safely build-up assets, outside of working longer or living more frugally in retirement."

S&P 500 Pension Underfunding Compared to Market Levels


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Tue, 07/17/2012 - 15:42 | 2625485 Buzzworthy
Buzzworthy's picture

Work, bitchez!

Tue, 07/17/2012 - 15:50 | 2625549 NotApplicable
NotApplicable's picture

Good thing Obummer signed that pension relief recently. Corps don't have to pay as much into the retirement plans, but instead pay more for "insurance" to the Pension Benefit Guaranty Corporation (PBGC).

All pensions will be nationalized, nuetralized and negativized!

Tue, 07/17/2012 - 16:01 | 2625599 ZerOhead
ZerOhead's picture

Sounds like the man has a plan. Now I just need to order up some ReDS (Retirement Default Swaps) from Goldman and I am good to go...

Tue, 07/17/2012 - 16:05 | 2625628 zaphod
zaphod's picture

The most scary thing is during the last S&P run-up over the past 3 years, the funding level has stayed flat or gotten worse at the same time due to ZIRP.

In each of the past S&P runups in 2000 and 2007, the pension funding level improved quite a bit.

Just imagine what will happen if stocks go down now instead of up. The pensions will be crushed like nothing before. This proves stocks can never go down on a nominal basis, the system won't allow it.

Tue, 07/17/2012 - 16:11 | 2625657 DosZap
DosZap's picture

Just imagine what will happen if stocks go down now instead of up. The pensions will be crushed like nothing before. This proves stocks can never go down on a nominal basis, the system won't allow it.


As a boomer, I assure ANYONE moron still in this market will deserve whatever they get.

Having been bit in the ASS 2x's during my life by the Markets, I got smarter and decided I could take care of ME better than some numb nuts broker,or artifical market,designed to milk everyone one dry.

Tue, 07/17/2012 - 16:19 | 2625701 surf0766
surf0766's picture

Nothing personal. But fuck the boomers

Tue, 07/17/2012 - 16:37 | 2625785 The Big Ching-aso
The Big Ching-aso's picture



Ponzi Pensions worked great when ya retired early.  Like about 20 years ago.

Tue, 07/17/2012 - 18:31 | 2626194 UP Forester
UP Forester's picture

Your pension has been rehypothecated.

Thank you for working for JPMorgan.

Tue, 07/17/2012 - 16:35 | 2625778 Peter Pan
Peter Pan's picture

If you subtract the amount of the underfunding from the gross capitalisation of the S & P 500 you will be knocking off around 5% off its value.

Tue, 07/17/2012 - 17:16 | 2625956 Cadavre
Cadavre's picture

Sounds like the man has a plan. Now I just need to order up some ReDS (Retirement Default Swaps) from Goldman and I am good to go...

Your RDS suggestion just blasted a load of snot and coffee on my shirt! Gave you a "10" for velocity and impact newtons.

Betting, if someone were to actually look, that the govcorps have been deferring taxes on their retirement fund obligations - wonder if there's an ES mini market for deferred govcorp pension plan taxes?



Tue, 07/17/2012 - 16:00 | 2625606 camaro68ss
camaro68ss's picture

Welcome to the life of us 20's somethings who will never see retirment! dam baby boomers and your handouts. screwed the county for us younger folks


get to work bitchez!

Tue, 07/17/2012 - 16:09 | 2625625 Michael
Michael's picture
Nigel Farage "...because stuck inside the Euro, you're going to literally be destroyed"


RNC Confirms: Ron Paul is going to Tampa!


The Republican National Convention is quickly approaching (August 26th). For over the past year, avid Ron Paul supporters have won delegate spots in various state conventions across the country. Through this hard-work, Ron Paul will officially be allowed to be nominated for the nominee of the Republican Party.

For the past three days, Ben Swann (Fox19 Cincinnati) has been in contact with a Republican Rules Committee member. In order for a candidate to be elected for the Republican Party nomination, the candidate must have a plurality in five or more states. If by rule, binding and non-binding policies are applied to delegates, it would still not affect the process of voting for placement of a candidate's name into the potential nominee ballot. Presidential hopeful Ron Paul does have a plurality in five or more states (Nevada, Maine, Minnesota, Louisiana, and Iowa). This means that Ron Paul will be eligible for nomination on August 26th in Tampa Bay.

The Ron Paul Revolution is planning on amassing 100,000+ supporters to Tampa in order to celebrate Paul's 30+ year career in American politics. However, the Republican National Committee senses pressure from the Paul supporters. The RNC has attempted to block access in order to make the convention as exclusive as possible.

The Ron Paul Revolution carries on to Tampa Bay with assurance that Ron Paul has the potential to be nominated. Whether or not Paul does win the nomination, we are all in for something special this August.


Tue, 07/17/2012 - 16:22 | 2625700 ZerOhead
ZerOhead's picture

Hmmm... interesting... a Ron Paul dark horse candicacy emerging at the RNC.

But where is the man's commitment to off-shoring both American jobs and his own made in American money?


Tue, 07/17/2012 - 16:23 | 2625718 the not so migh...
the not so mighty maximiza's picture

Not going to happen now, Romnster flooded the Nebraska deligation.

Tue, 07/17/2012 - 17:22 | 2625990 Abiotic Oil
Abiotic Oil's picture

Doesn't matter.  Ron already has plurality in 5 states.  He can be nominated and appointed from the floor.

No Obomney!

Wed, 07/18/2012 - 08:53 | 2627558 the not so migh...
the not so mighty maximiza's picture

I hope your right

Tue, 07/17/2012 - 17:27 | 2626006 Anusocracy
Anusocracy's picture

Time to form a shadow government with Ron Paul as Pres.

Sort of a trial run of the only political system that makes sense: the competing governments of panarchism.



Panarchism is a political philosophy emphasizing each individual's right to freely join and leave the jurisdiction of any governments they choose, without being forced to move from their current locale. The word "panarchy" was invented and the concept proposed by a Belgian political economist, Paul Émile de Puydt in an article called "Panarchy" published in 1860.[1] The word "panarchy" has since taken on additional, separate meanings, with the word "panarchism" referring to the original definition by de Puydt.[1]

De Puydt, a proponent of laissez-faire economics,[1] wrote that "governmental competition" would allow "as many regularly competing governments as have ever been conceived and will ever be invented" to exist simultaneously and detailed how such a system would be implemented. As David M. Hart writes: "Governments would become political churches, only having jurisdiction over their congregations who had elected to become members."

Tue, 07/17/2012 - 16:24 | 2625684 Sudden Debt
Sudden Debt's picture

first they don't give a fuck about the young generation they thought it was normal to say to the young that it's better to come to terms with the fact that they'll never receive a pension when they grow old.

then... the money runs out... and they demand their pension plus a raise if possible. but there's no more money so they'll receive just enoughh to buy dogfood in cans.

then... their words... about never having to receive a pension become reality.


YEP.. They'll receive what they offered the young kids.

I'm 35 going 36 in oktober (you better all send me a nice card)
and I've got the time to rebuild everything.
and I've got a head start because I've got enough now to retire on in silver.

I've warned a lot of old people, retired or going into retirement. they clearly said they didn't give a fuck.

so now... I won't give a fuck either.

they where the generation of peace in the 70's. but they almost all broke their ideals and voted for the quick buck even as they knew it was a ending story. rest assured, they really knew things couldn't keep up like is was.

they didn't give a fuck that young people couldn't buy the mansions they had for cheap.
they didn't give a fuck that young people had to take 2 jobs to get by and work as a couple going through life with stress when a kid came into their lives.
they lived the dream. and didn't care about their kids.
and now... they'll grow dependend on those same kids....

good luck with that...

what's important for me and how can I profit from it.
that was their crede and that's how they raised us.
I'm raising my kids to be polite, fair in both ways and nothing's for free.
I'm strick and the law is the law in my house.
and guess what... my kids love me like I love them.
they're the most important thing for me and I make sure they know it all the time.

Tue, 07/17/2012 - 16:27 | 2625739 DosZap
DosZap's picture

 Sudden Debt

Put the blame where it belongs.......................Wall Street, and the Feds.

Tue, 07/17/2012 - 20:16 | 2626431 Sudden Debt
Sudden Debt's picture

no, we're also a greedy self centered society who doesn't gives a fuck about anybody or anything else that doesn't give a personal advantage

Tue, 07/17/2012 - 16:24 | 2625722 DosZap
DosZap's picture

Welcome to the life of us 20's somethings who will never see retirment! dam baby boomers and your handouts. screwed the county for us younger folks


get to work bitchez!


Been to work, for 40yrs, and read some history before you point the finger at people who slaved their ass off,because they were just taking handouts bitchez.

After all,dont you KNOW Obammmy say's NO one is successful in business,esp their own,BECAUSE the FEDS do it for them.

Spoken like true Commie.They were right there with me all those 40 yrs,putting ALL those hours, and days in.Sucking taxes and fees, and giving it ALL right back!!.

Funny, I do not remember seeing anything but a bunch of money grubbing whores.(using our $$$$ to pad their retirements, and lifetime bennies).

Always amazed me the Politicos, are quick to take the good, but NONE of the bad?.

Whose tax dollars pay for infrastucture in the US cities?, citizens taxes.

Who paid for the Interstate Highways?.........taxes not from the Feds, because they are vampires, and give only a portion back,or what was OURS to begin with,and WE sent them to start with.

Tue, 07/17/2012 - 20:10 | 2626416 Buck Johnson
Buck Johnson's picture

Yep, and it's going to be ugly.  Because dthe PBGC doesn't pay as generously as the plan that many of them are on.

Tue, 07/17/2012 - 15:58 | 2625588 Drag Racer
Drag Racer's picture

eat your peas bitchez...

Tue, 07/17/2012 - 15:59 | 2625597 Michael
Michael's picture
Baltic Dry Index Implodes, Signals Global Economic Collapse


Tue, 07/17/2012 - 23:08 | 2626815 Vesuvius
Vesuvius's picture

Looks like the Baltic Dry Index has been going up since Feb 2012.  In 2009 it fell from 12,000 to about 1,000 and it's been about 1,000 ever since.


Tue, 07/17/2012 - 16:04 | 2625622 Ineverslice
Ineverslice's picture


Go to ur shed and locate that rusty old pitchfork....and store up some kerosene everyone.

Tue, 07/17/2012 - 17:57 | 2626092 bonddude
bonddude's picture

Look what Pelosi is doing while Calpers/sters is going under and taking city after California after city with it. The comments are priceless.




Tue, 07/17/2012 - 15:41 | 2625486 urbanelf
urbanelf's picture

Does anyone remember the Krugman article where he asked where all the mythical fixed income dependants are?

Tue, 07/17/2012 - 15:41 | 2625487 Pladizow
Pladizow's picture

Just tweak the discount rate - problem solved!

Tue, 07/17/2012 - 15:49 | 2625540 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Is that like tweeking the LIBOR rate?

Tue, 07/17/2012 - 17:15 | 2625488 LawsofPhysics
LawsofPhysics's picture

There is a very real cost for capital creation (despite what Krugan says).  Looks like the pensioners will pick up the tab.  i wonder how many are veterans as well?

Just wait as NIRP comes into play.  Then pensions and 401ks will pay off the debt. 

Tue, 07/17/2012 - 15:43 | 2625492 FubarNation
FubarNation's picture

Retirement is a recent phenomenon in human development.  I'm afraid that it will not be what most baby boomers expect.


I don't expect ever to retire (I'm 45 tomorrow).  I hope my kids don't throw me out to the curb when I'm old and useless.

Tue, 07/17/2012 - 15:54 | 2625559 ZerOhead
ZerOhead's picture

Just so long as you still have money I am sure they will have a place in their hearts for you.

Still it might not be a bad idea to purchase a firearm or two while you can for insurance purposes...

Tue, 07/17/2012 - 15:58 | 2625591 john39
john39's picture

kids won't have jobs either.

Tue, 07/17/2012 - 16:21 | 2625709 Widowmaker
Widowmaker's picture

Whoa, who cares about children all of the sudden!??

The only thing children get is a decimated family structure and all the debt-servitude they can eat.

Fraud street Inc told children to fuck off in the 90's.

Tue, 07/17/2012 - 17:08 | 2625918 Dburn
Dburn's picture

Don't let hope get you down, trust that they will fuck you up.


*Fuck-off Dad. You shouldn't have had us if you were so fucking concerned with your own selfish thoughts of retirement.

*ZH wingnut logic

Tue, 07/17/2012 - 18:41 | 2626226 Tippoo Sultan
Tippoo Sultan's picture

+1, Fubar.

Tue, 07/17/2012 - 15:42 | 2625493 veyron
veyron's picture

Savers are screwed (food prices skyrocketed), pensions are dead, ...

What's next?  401K's are missing?

Tue, 07/17/2012 - 18:46 | 2626243 Tippoo Sultan
Tippoo Sultan's picture

Highly unlikely. The several trillions of 401(k)/403(b)/SEP accounts present a virtually guaranteed "annuity" of taxable funds with which the Government can toy, and extract an insatiably growing tax levee over the succeeding years.

Tue, 07/17/2012 - 15:42 | 2625494 Tijuana Donkey Show
Tijuana Donkey Show's picture

I feel better already, I planned my retirement around using SSI, and other great gov benefits instead of trusting the "private" market. What could go wrong?

Tue, 07/17/2012 - 15:44 | 2625508 Oldballplayer
Oldballplayer's picture

Can I get a low interest rate loan to start my crack business?

Tue, 07/17/2012 - 16:04 | 2625621 slyhill
slyhill's picture

Yes. As long as you take EBT.

Tue, 07/17/2012 - 17:04 | 2625906 Dburn
Dburn's picture

Have you gone though your Mandated apprenticeship training as an *"assistant crack whore" yet?

* Worst Job ever as Described by Comedian Dennis Miller

Tue, 07/17/2012 - 17:41 | 2626051 Rip van Wrinkle
Rip van Wrinkle's picture

I understand HSBC are keen to get into the crack business.Try them.

Tue, 07/17/2012 - 15:44 | 2625514 Dr. Engali
Dr. Engali's picture

I'm sure this will work out well. The boomers will keep on working and the new college debt slaves will continue to go hungry. Way to go Bernank.

Tue, 07/17/2012 - 15:45 | 2625519 Canadian Dirtlump
Canadian Dirtlump's picture

on top of the likes of GE (and Berri soetoro's job creation man crush) head Giggolo Jeff Immelt and others raiding / selling pension assets already this should be just the ticket to guarantee life long employees to either starve early or work till they die.. Win win for the satanic mongoloids behind the curtain.


tuesday mantra, fuck *.*

Tue, 07/17/2012 - 15:45 | 2625520 fonzannoon
fonzannoon's picture

 Always with the baby boomers....

I must say I feel terrible for the baby boomers. I mean the 20 years between 1980 and 2000 was just not enough time for them to benefit from stocks going up 15% a year and real estate exploding for the latter portion of that. It probably was not enough time to get hooked up with some sweet pension from their job (public or private). If you are a baby boomer and managed to not be a part of any of what took place or a combination of all of it then you either had some really tough circumstances or you just plain squandered the opportunity of a lifetime.

Tue, 07/17/2012 - 16:03 | 2625617 derek_vineyard
derek_vineyard's picture


Tue, 07/17/2012 - 16:47 | 2625823 blunderdog
blunderdog's picture

As with most generations, EVEN the boomers (who collectively possessed the greatest wealth, educational opportunities, and most forgiving investment markets) were mostly just a bunch of wage-slaves.

It should really be no surprise that the majority of them did NOT "get rich" despite all the opportunities to do so.

If nothing else, hopefully they ALL got some fuckin' AWESOME health-care payout from the Medicare system. 

An older woman I know (early 70s) and longtime homemaker with no steady work since the 1960s, walked off on a $200,000 pair of knees that would not likely have existed if we hadn't been paying FICA all those years.

Tue, 07/17/2012 - 17:15 | 2625953 Totentänzerlied
Totentänzerlied's picture

Surely you're quoting the Medicare billed cost. Real cost is maybe 1/4 of that. Also, why does a 70-something need new taxpayer-funded knees with maybe 20 years to live at most? How do I get in on that for a knee-level leg prosthetic with 55-65 years to live? Certainly not buying off the seniors with free medical care, nope.

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