I'm not very familiar with pension systems, and would love any insight from someone more knowledgeable on the subject.
It seems that many companies with older workforces are in situations similar to the states. Am I correct in assuming that most pension programs have fixed liabilities with liquid asset pools?
I'm no expert on this, but from what I've read, most pension plans are dependent on 8% annual gains to run in the black. When stock market returns fell short of the goal they bought into higher risk, less liquid things like credit-default swaps. When a gov't plan inevitably needs to be topped up then the taxpayers pay more, until they can't or won't, which is when a bankruptcy or pension haircut occurs.
cnbc.com
I'm not very familiar with pension systems, and would love any insight from someone more knowledgeable on the subject.
It seems that many companies with older workforces are in situations similar to the states. Am I correct in assuming that most pension programs have fixed liabilities with liquid asset pools?
I'm no expert on this, but from what I've read, most pension plans are dependent on 8% annual gains to run in the black. When stock market returns fell short of the goal they bought into higher risk, less liquid things like credit-default swaps. When a gov't plan inevitably needs to be topped up then the taxpayers pay more, until they can't or won't, which is when a bankruptcy or pension haircut occurs.