Pension fund storm clouds on the horizon

Big government central planning has accomplished little, if anything, in the way of resolving the severe liquidity problems plaguing global economies. Central Banks have pumped enormous amounts of liquidity into the financial system over the past eight years, and we are left with:                                                                                                                1) massive government debt levels, 2) massive household debt burdens, 3) anemic economic growth, 4) growing dependence on government social welfare, and now            5) a pension fund ‘storm’ that will strip millions of citizens of their retirement savings.

There are dark clouds on the economic horizon.


The Pension Bubble: How The Defaults Will Occur

ZeroHedge – Jun 10, 2016 / Submitted by Peter Diekmeyer via,

Excerpts:                                                                                                                      Experts worry about stock, bond and real estate market excesses. But a bubble is forming that dwarfs them all: in pension plans. Millions of Americans and Canadians who are counting on pension benefits to fund their retirements risk being severely disappointed.

The hard money community has, of course, been aware of this for some time. However in recent years, even the elites have been taking notice.

[According to the International Forum of the Americas, ]…  Pension funds, which have been issuing over-optimistic revenue forecasts for years, aren’t going to earn nearly enough money to pay the benefits recipients expect.

Much of this relates to secular stagnation in the economy.

Bonds, which form a major part of most plans’ holdings, earn next to nothing in interest.

Stocks, which are trading at record levels, despite falling corporate earnings, look to have more downside risk than upside potential.

Worse, if bond returns average 2%, balanced portfolios projecting 7% to 8% annual returns have to earn 12% to 14% on equities investments to make up the difference. That’s unlikely to happen.

At least private sector plans have some money in them – public sector plans are in even in worse shape.

Governments have almost nothing put aside to fund future retirees – and they don’t even fully list their debts.


House prices up 12%, food prices 3.7%. Pensions up 1.3%

Another tactic used by government officials and pension fund managers to avoid paying out pensioners is to inflate away the problem. As John Maynard Keynes, the great economist, noted: inflation is an excellent way to extract wealth, because not one man in a hundred will understand how it was done.

Here is how it works: governments promise pensioners that their benefits will be indexed to protect beneficiaries against rising prices. But they then use selected or massaged statistics to back out.

In Canada, federal (CPP) pension plan recipients will see their benefits rise by 1.3% during 2016. But food prices, according to Statistics Canada, rose by 3.7% last year. House prices rose by 12% up to December 2015 according to the Canadian Real Estate Association.

The controversial John Williams of Shadow Statistics provides credible research about how the data massaging works in the United States.

The effects of prices rising faster than benefits, over time, can be dramatic. If prices rise by 2% faster than pensions each year, then by the 20th year of retirement, beneficiaries will be losing 40% of their purchasing power (I am calculating using a straight line basis for simplicity).

In short, most pensioners won’t have a clue what hit them.

Outright defaults

Seniors vote – and there are a lot of them. So outright defaults on pension obligations will be a last resort of politicians and private sector plan managers.

However, it is starting to happen.

The ongoing saga of the US Central States Pension Fund, whose 400,000 beneficiaries were recently offered cuts of up to 60% in the amounts they receive, provides an excellent warning.

Amazingly the Central States Pension Fund, which manages funds for retirees from a number of companies in 37 states, actually has $18 billion in funds. Managers from those companies simply over-promised wor how much money they would get.

Pensioners in a variety of public plans including Detroit’s – which went bankrupt – and Illinois – which is insolvent – haven’t been much luckier. Many more will suffer the same fate.


America, Canada, Europe, Asia – it is time to change course and re-target liquidity flows to support citizen-directed economies..

It is time to decentralize, eliminate debt, recharge economic growth, reduce dependence on government.

It is time to restore economic liberty.

The Leviticus 25 Plan is a dynamic economic initiative providing direct liquidity benefits for American families, while at the same time scaling back the role of government in managing and controlling the affairs of citizens.  It is a comprehensive plan with long-term economic and social benefits for citizens and government.

The inspiration for this plan is based upon Biblical principles set forth in the Book of Leviticus, principles tendering direct economic liberties to the people.

The Leviticus 25 Plan 2017 –  $75,000 per U.S. citizen                                                   The Leviticus 25 Plan 2017 (1563)

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