I have written many times about the reckless implosion of pension funds and the negligence of administrators, boards and financial managers and advisors to serve the best interests of the beneficiaries in controlling risk and maintaining realistic return expectations and sufficient funding levels. (here are just a few of my articles from the past few months).
This week the insolvent Dallas Police and Firefighters pension made news by freezing withdrawal requests and last week the City said it would seek to recoup capital from those who have already cashed out lump sums. The fact is that this and many other pensions have been run like a Ponzi scheme for the past two decades. Capital deficits born of chronic under-funding, unfavorable demographics, too rich promises, and boom/bust financial markets, have been evident for all but the willfully blind.
We should expect an epidemic of similar revelations and law suits as workers awake to the reality that there is not enough money in the pot to fund expected benefits. See: Not Just Dallas, Fort Worth Employees’ Pension plan in deep trouble.
All of this is ironically coming to public consciousness just as the Trump administration is working with the financial lobby to reverse an incoming fiduciary standard for those giving retirement investment advice. See: Chamber’s CEO: “Already working” with Trump to kill DOL fiduciary rule:
“The U.S. Chamber of Commerce is “already working” with Trump administration transition officials to “undo” the Department of Labor’s fiduciary rule, Thomas Donohue, Chamber’s president and CEO, said Monday.
In his Monday blog post, In Your Corner, Donohue said that the Chamber is “urging immediate action to undo” Labor’s fiduciary rule, because “if enacted, it would choke economic growth, increase frivolous litigation against financial advisers and make saving for retirement more difficult for hardworking Americans.”
Translation: the financial lobby says we cannot afford ‘advisors’ to be honest and ethical and put the best interests of those relying on them for advice first, because doing so will result in lower sales and more litigation against advisors for the financial damage they help inflict. It is mind-boggling that they can continue to advance these arguments without shame, embarrassment or public-revulsion.
It seems more pensions and retirees will need to suffer financial hardship before serious reforms and housecleaning can be done in this corrupt, self-serving industry.
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