£36bn gone from top 200 UK funds in June
December 4, 2008
The turndown of equity markets in June cost the top 200 largest privately-sponsored UK pension funds a total of £36bn. That leaves three quarters of the funds in deficit by £30bn. This shocking vulnerability makes one wonder what will happen to pensioners who have the misfortune to start drawing their pensions during a prolonged economic downturn.
At one time it would have been argued that pensions must guarantee a defined standard of living that is independent of equity markets. This social contract made sense to the generation that suffered the Great Depression a World War and two decades of recovery–less so to the current generation of politicians and fund managers.
Shares gloom leaves pension funds with £30bn deficit
CBO Testimony Released
December 4, 2008
The Effects of Recent Turmoil in Financial Markets on Retirement Security
From MarketWatch: Pensions vs 401(k)s in light of the current crisis
December 4, 2008
Marketwatch highlighted the uncertainty of defined contribution plans today in an article entitled "Financial Crisis Recasts Debate on Pensions Versus 401(k)s". Among observations made was:
"The current environment underscores some latent employer risks with 401(k) plans," says Glickstein. "For example, they make it harder for companies to predict who will retire and when. Employees who mostly rely on 401(k)s are also more likely to worry about their financial security, creating an additional drain on morale and productivity during turbulent times."
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