Call me a conspiracy theorist, but if private equity (who have no soul) are payng out pensions, they will do better financially if people die younger. We all know what coincided with private equity involvement over the last five years that, one way or another, killed lots of old people.
It is not a coincidence that policies that enable euthanasia are being discussed daily. We are not where Canada is, but give it time we will get there. The geniuses in PE will plow money into politicians who advocate for euthanasia. It is sold as humane, and, yet, I can easily imagine someone at my bedside going through the financial consequences to my spouse and children if I do NOT choose death...It's not a conspiracy theory if it is true.
I'm hearing no reporting on the GOTTHEIMER/BACON BILL newly introduced in Congress to set censorship guidelines and penalties for online speech in our Republic.How far down the line is Starmer's England?
Euthanasia is a natural tool of the world wide managerial bean counter sterility and the surveillance spooks who serve the DNC/Brussels/CCP Davos crowd. --- A definite possible scenario--sweep the streets of the inconvenient drug addled walking wounded and homeless--put them in a "recovery center" and--as reported from Canada--encourage euthanasia as an immediate solution to their problems.
Your pension fund goes belly-up--unlike Wall Street insiders-- there ain't gonna be a bail out. ---Again: Access to uneducated--(check American literacy rates)--disposable labor and access to all natural resources for personal gain and profit without oversight or consequence. It's not something else. Feeding on the lives and labor of peoples and nations--in this case that of We the People--is what slavers do. Got Constitution?
Any change coming our way will come from We the People. The chasm is wider every day. Depart the psyop and live.
(Shout out to RACKET/Salzman for keeping this conversation going. And don't forget BIG/Stoller. Anyone interested in shaking off the LIE should invest an hour in the N.S. Lyons essay the CHINA CONVERGENCE.)
I think I understand what you're trying to say. But Teeamigo is correct - PE firms that buy life insurance companies benefit if the policy holder lives longer, as opposed to being euthanized prematurely. But that is offset by the greedy desire to end the life of a pension recipient early. It would be difficult, even for a PE firm, to advicate euthanasia only for pensioners who don't own life insurance.
That's why I pointed to life insurance policies - not annuities. When PE firms buy life companies, they don't get to choose what "products" for which the target company already is liable. When you acquire an insurance company (Eric S. cited several) you're going to be on the hook for both products that the life insurance company previously sold to its customers. The idea that a PE firm that buys a life company is going to be automatically biased to be in favor of euthansia is a stretch to the point of being a bit absurd.
You're not a conspiracy theorist. Edward Dowd has been putting out information about recent changes in mortality rates. Significant trend of unexpected early payouts in the last five years.
The conspiracy part is whether they are just happy with the outcome (fewer old people who need pensions) or actively helped it happen through possible bioweapons or mandates.
The previous article on Racket talking about how private equity stripped equipment and supplies from hospitals which directly let people die suggests that the private equity people are evil enough to do anything. Will we ever know exactly what they did to cause or profit from Covid?
Does everyone with a pension have life insurance? That's the question. Is it better for the PE to pay a quick life insurance payment now or a pension until the recipient is 95 years old?
A life insurer bets you that you aren’t going to die. The longer you live, the better.
A defined benefit pension fund is better off if you are short-lived.
There are about $3.5 trillion in life insurance policies outstanding in the US and about $10 trillion in defined benefit pension plans (70 pct public sector)
As social security is the largest defined benefit pension fund in the US (not counted in my stats above) tin foil hat conspiracy theorists should be more concerned about the government than PE!
I oppose violence. We must use the law to make their strategy unprofitable. We must have PE managers and insurance companies executives become personally liable for these losses. The idea that the companies can make short sighted investments and pay themselves enormous bonuses, then have the government bail them out and pay themselves enormous bonuses again is outrageous. If these keeps up I don’t know how we will be able to stop violence.
It seems the courts are merely reactive. You can seek redress there only after suffering significant financial harm. Capitalism with no “moral compass” is a monetary Wild West. Caveat Emptor.
Not a lawyer, but I know court cases are often dismissed if no actual harm can be shown to have been done. Also, the party bringing the case must show that they are being injured in the case they are bringing to court. That is part of the arguments about standing you will see in some court cases.
So yes, the courts are reactive, and meant to be so. Assuming we're referring to the U.S. with our three branches of government, it is the legislative and executive branches who are tasked with being proactive.
Yes, capitalism without morality is a disaster and brings out predatory behavior. In fact, any system of organization will become a predatory disaster if the participants do not have some sort of moral code they follow. If you read P.J. O'Rourke's discussion of Adam Smith's Wealth of Nations, O'Rourke states that Wealth of Nations was Smith's second book and Smith's first book, A Theory of Moral Sentiment (I think that was the title), was about why do we care about someone else's feelings. O'Rourke says people now only remember Wealth of Nations but nothing in that book can function without the morality that Smith discusses in his first book. And that Smith and his contemporaries knew this and expected society knew that and would remember that too.
We humans are not inherently logical. And in my own opinion, the more primitive and powerful a concept or practice is, the less willing we are to acknowledge that because we don't like acknowledging how much of our brain is something our conscious mind can't easily see yet can and will greatly affect the conscious mind. When societies try to throw away old illogical practices like ritual or religion which helped support the commonly accepted moral code, great problems follow. Communism is a system which throws away old practices because they are illogical or counter to the revolution and the French Revolution in some of its crazier ideas went down that road too. Disaster usually follows. It is usually intellectuals and artists who are most convinced that throwing away these old archaic notions will only benefit everyone, and unfortunately they are often very persuasive in their arguments and also usually they are very unprepared for how awful things will become once the old rules are thrown out and the new rule is "whatever you can get away with."
I believe that in the U.S. there is a real push to move back from the extremes and get back to a system that has more resilience and has more people willing to say "before we try your amazing new idea, let's look at what is likely to happen if you're wrong and let's also look at whether you've done any work to prepare for the possibility you're wrong."
I share your diagnosis, but I fear that I cannot concur with your belief about a real push to move back from the extremes. For that matter, doing nothing more than curbing the current excessive influence of the extremes (both on the left and on the right, as well as in our culture overall) seems unlikely to provide a great deal of resilience in and of itself. Resilience for many of our institutions (and our culture in general) will demand a major restoration of redundancies and fail-safe measures that have been under continuous erosion for many decades. There are some of us who genuinely want to restore a foundational moral core to our body politic, but I am not convinced that we are likely to succeed at any time in the near future.
And the hidden loss is that the original guarantor/payor of the pension - the employer - is utterly off the hook a few years after the transaction due to the statute of limitations.
The risk is shifted, the employer waits 5 years (generally) and it is off the hook. The PE crooks will have paid out management fees and other sums to its "partners" that just about evens out the initial price and then continues to collect. Sweet deal to all save the pensioners who earned the money in the first instance.
The PE takeover of medicine, veterinarians, HVAC, and other small private businesses is a disaster: quality drops, investment drops, cash flow pillage.
Of course, none of this is rocket science. If pension contributions are invested in a fund with managers who have a fiduciary duty - along with a moral compass to do the right thing - to ensure financial probity and reasonable returns on investment, nothing can go wrong, even if the company funding the pension fails. Although the recent trend in business is to close defined benefit pension plans and switch to 401-K plans with some employer match. Allowing private equity into the equation will, of necessity introduce risk into the mix that has no business being introduced into long-term retirement assets on which employees rely. And what of the thirst that the PE vampires have for 401-K assets? Maybe the best course would be to change the laws the allow PE to exist and prosper?
You hit the key concept: fiduciary duty. Rarely do we see lawsuits holding those who breached their fiduciary duty accountable. This is especially true in any instance or industry where limited partnerships are used. When the venture is profitable it doesn't matter. But when things go sideways or upside down....
I'd be right there with you, but only with guillotines in place for those who expose their lack of a moral compass and ruin people insodoing. This is what has been missing in this country for too long. So...
Agreed with most of what you say here. But the beef with PE, for many many years was that only wealthy people got to earn the kinds of hefty returns from investing in them. Many econo pundits called this grossly unfair to the little guy, who had no access to the PE deals due to the accredited investor rule. The little guy, whom I support because I am one, can't have a complaint "both" ways, however. Either it's unfair to be excluded from access to PE rates of return, OR, it's unfair to expose a Pensioner's future benefit payment stream to more risk than a US Government bond, but it can't be both.
But pensioners weren't limited to just government bonds. Many pension plans earned very good, market returns because they were run by seasoned pros who took their fiduciary duty seriously.
Pensions (defined benefit plans) are insured by the Pension Benefit Guaranty Corporation (PBGC). It pays out pennies on the dollar when pension funds go broke. They run deficits in the tens of billions of dollars every year and recent congressional legislation was needed because funds would run out in 2026.
We can never re-industrialize unless we first get rid of our financialized/privatized economy. Private banks have to be removed.
If you want PE's model for business acquisition read how Bed Bath and Beyond failed.
"Show me the incentives and I will show you the outcomes."--Charlie Munger.
PE is taking over pensions and annuities not only through transfer agreements, but simply by getting pension funds and insurance providers to invest in their firms, and now in their shares. The gullibility of pension funds board members, often elected teachers, police, and firefighters with no special financial chops, leaves them vulnerable to the direction of the investment consultants they hire, who work hand in glove with the big money such as PE. Those teachers, police, and firefighters are sometimes also open to the goodies that the money side of things can do for them--from junkets to tickets to invitations to post-retirement jobs.
I witnessed this firsthand, working in the 2010s for a large state/local government with big pension finance problems. As part of my duties, I attended pension fund board meetings and got the investment reports, and saw the presentations by the consultants. You could follow the fads, and you could look at the portfolios and sadly sigh.
Economists call it "the principal-agent problem." The principals, in this case the pension fund board, have a primary goal to ensure promised benefits to the members. The agents that they hire--investment consultants and advisers and PE funds, have completely different goals. Reality exists in the gap between those different incentives and goals.
The main thing for the outsider to know about PE is that it is a "friends and family" enterprise, and if you are neither, there is no reason to think you will be offered participation in the good deals. There is "smart money" and there is "dumb money." Both are welcome, but smart money is treated with respect, dumb money not so much.
There is a very old saying in poker, that goes something like, "If after a half hour at the table you still don't know who is 'the mark,' it's you." PE is like that. If you study the contract(s) you are signing and cannot tell who is structurally being taken advantage of, it's you.
Another old saying, about business partnerships, which is what most PE deals are: "At the start, the General Partners have the knowledge and the Limited Partners have the money. At the end, that is reversed."
Or, colloquially, "There's a sucker born every minute."
Pension benefits often used to collapse when companies changed hands (often so as to steal the pension money). After this happened repeatedly stealing the pensions of many Big Company retirees, Congress finally stepped in:
"Congress and the legality of altering pension plans
It is not illegal for a company to terminate a pension plan, provided they follow the established legal procedures.
However, the Employee Retirement Income Security Act (ERISA) of 1974 set minimum standards to protect worker's pension benefits. ERISA requires that:
Plans be adequately funded.
Fiduciary duties be upheld by those managing the assets.
Participants receive detailed plan information.
A grievance and appeals process be in place.
The Pension Protection Act of 2006 (PPA) further strengthened these regulations by increasing the funding requirements for defined benefit plans and addressing issues related to underfunded pensions. The PPA was enacted on August 17, 2006.
Key aspects of ERISA and PPA
ERISA laid the groundwork for safeguarding pension benefits and established the Pension Benefit Guaranty Corporation (PBGC) to insure pensions.
PBGC guarantees payment of basic pension benefits in private-sector defined benefit pension plans, up to a maximum amount.
The PPA aimed to close loopholes that allowed companies to underfund pension plans and introduced stricter regulations to protect retirement accounts.
In essence, while companies can terminate pension plans, they are bound by laws like ERISA and the PPA to ensure that the process adheres to strict guidelines and protects the pension benefits of employees and retirees. "
Lots of money in pensions and PE plans are just the latest iteration for stealing that money.
Life insurance companies are soulless bloodsucking leaches too so tell me why should we care which soulless bloodsucking leach sucks us till there is nothing left? The people who we have elected to protect us have always sold their services to the highest bidder. Ever see a poor life insurance company? Hell if you want to make good money sell whole life insurance policies to parents of kids on the kids life.
"why should we care which soulless bloodsucking leach sucks us till there is nothing left"
That's why the problem of our times is not about managing capitalism vs socialism. After all, *each* allows 'soulless bloodsucking leaches' to rape the weak; the former openly and organically, the latter via totalitarian shocks from two-faced dictators crowing about 'democracy'. The actual problem of our times is society's management of psychopathy vs empathy.
It would seem there are more than a few "soulless bloodsucking leaches" on this very thread, who made their careers in previous (or even current) permutations of the never-ending con of dumping risk and loss on taxpayers and people.
But as we have seen with our own eyes, there are no angels among those employed at the PBGC. And there are no angels among the judges who adjudicate PBGC cases. The United Airlines bakruptcy case comes to mind, where the judge let off the PBGC's obligation to United's rank and file workers to something like 50 cents-on-the-dollar.
Eric Salzman is on target with his assessment. If things continue on the course they are on now the Federal Government will ultimately have to print a lot more money. Many years of regulatory failure at both the state and federal levels have life holders of life insurance and annuity products at risk. Aggressive sales of complex variable annuities have led to huge liabilities that are offset by insurance company so-called reserves. It's common for insurance companies to transfer significant amounts of the liabilities to reinsurance companies for a portion of the premium income. The guarantee the reinsurance companies will pay those liabilities is only as good as the assets the reinsurance companies have to back it up. There is the PBFC which is not legally required to be funded by the federal government if there was an asset crash. And then you have state and municipal pensions which our government has allowed to be dangerously underfunded for decades. That will be the first to go.
You will receive a notice of the transfer from your employer. Your monthly payments will also come from the insurance company once the PRT occurs- you’ll see it on your check.
This is an unnecessarily one-sided presentation of a complex topic. Imagine what the author could do with the simple risk opportunity presented by the issuance and investment in equities.
Strange that you fail to mention the funded status of any of these transferred pensions. Perhaps the most relevant detail and you somehow missed it.
Also you either missed or failed to grasp that a major reason for PRTs is the fixed cost of PBRC insurance. Subscale pensions are inefficient and for fewer dollars go to beneficiaries when they are eaten up by fixed costs. Staff and operations are a part of this, too.
This is populist dribble and not serious reporting.
I am just pointing out the risks involved in this movement. With regard to your fully funded comment, you are right. I actually had the steps of a PRT....it was edited out and I did not catch it.
What judges, federal or otherwise, have the background and bandwidth to grok what is going on in private equity-insurance world? Maybe one - maybe none
Call me a conspiracy theorist, but if private equity (who have no soul) are payng out pensions, they will do better financially if people die younger. We all know what coincided with private equity involvement over the last five years that, one way or another, killed lots of old people.
It is not a coincidence that policies that enable euthanasia are being discussed daily. We are not where Canada is, but give it time we will get there. The geniuses in PE will plow money into politicians who advocate for euthanasia. It is sold as humane, and, yet, I can easily imagine someone at my bedside going through the financial consequences to my spouse and children if I do NOT choose death...It's not a conspiracy theory if it is true.
I'm hearing no reporting on the GOTTHEIMER/BACON BILL newly introduced in Congress to set censorship guidelines and penalties for online speech in our Republic.How far down the line is Starmer's England?
Euthanasia is a natural tool of the world wide managerial bean counter sterility and the surveillance spooks who serve the DNC/Brussels/CCP Davos crowd. --- A definite possible scenario--sweep the streets of the inconvenient drug addled walking wounded and homeless--put them in a "recovery center" and--as reported from Canada--encourage euthanasia as an immediate solution to their problems.
Your pension fund goes belly-up--unlike Wall Street insiders-- there ain't gonna be a bail out. ---Again: Access to uneducated--(check American literacy rates)--disposable labor and access to all natural resources for personal gain and profit without oversight or consequence. It's not something else. Feeding on the lives and labor of peoples and nations--in this case that of We the People--is what slavers do. Got Constitution?
Any change coming our way will come from We the People. The chasm is wider every day. Depart the psyop and live.
(Shout out to RACKET/Salzman for keeping this conversation going. And don't forget BIG/Stoller. Anyone interested in shaking off the LIE should invest an hour in the N.S. Lyons essay the CHINA CONVERGENCE.)
THE LINK IS A TYPO. SORRY. :)
I think I understand what you're trying to say. But Teeamigo is correct - PE firms that buy life insurance companies benefit if the policy holder lives longer, as opposed to being euthanized prematurely. But that is offset by the greedy desire to end the life of a pension recipient early. It would be difficult, even for a PE firm, to advicate euthanasia only for pensioners who don't own life insurance.
Life insurance companies selling annuities benefit greatly from early death, which shortens or avoids payments altogether.
That's why I pointed to life insurance policies - not annuities. When PE firms buy life companies, they don't get to choose what "products" for which the target company already is liable. When you acquire an insurance company (Eric S. cited several) you're going to be on the hook for both products that the life insurance company previously sold to its customers. The idea that a PE firm that buys a life company is going to be automatically biased to be in favor of euthansia is a stretch to the point of being a bit absurd.
Yes, you are correct. I was considering the pensioner as a liability.
You're not a conspiracy theorist. Edward Dowd has been putting out information about recent changes in mortality rates. Significant trend of unexpected early payouts in the last five years.
The conspiracy part is whether they are just happy with the outcome (fewer old people who need pensions) or actively helped it happen through possible bioweapons or mandates.
The previous article on Racket talking about how private equity stripped equipment and supplies from hospitals which directly let people die suggests that the private equity people are evil enough to do anything. Will we ever know exactly what they did to cause or profit from Covid?
Pension and life insurance risk are natural offsets
Does everyone with a pension have life insurance? That's the question. Is it better for the PE to pay a quick life insurance payment now or a pension until the recipient is 95 years old?
A life insurer bets you that you aren’t going to die. The longer you live, the better.
A defined benefit pension fund is better off if you are short-lived.
There are about $3.5 trillion in life insurance policies outstanding in the US and about $10 trillion in defined benefit pension plans (70 pct public sector)
As social security is the largest defined benefit pension fund in the US (not counted in my stats above) tin foil hat conspiracy theorists should be more concerned about the government than PE!
I oppose violence. We must use the law to make their strategy unprofitable. We must have PE managers and insurance companies executives become personally liable for these losses. The idea that the companies can make short sighted investments and pay themselves enormous bonuses, then have the government bail them out and pay themselves enormous bonuses again is outrageous. If these keeps up I don’t know how we will be able to stop violence.
It seems the courts are merely reactive. You can seek redress there only after suffering significant financial harm. Capitalism with no “moral compass” is a monetary Wild West. Caveat Emptor.
Yes, that is true.
Not a lawyer, but I know court cases are often dismissed if no actual harm can be shown to have been done. Also, the party bringing the case must show that they are being injured in the case they are bringing to court. That is part of the arguments about standing you will see in some court cases.
So yes, the courts are reactive, and meant to be so. Assuming we're referring to the U.S. with our three branches of government, it is the legislative and executive branches who are tasked with being proactive.
Yes, capitalism without morality is a disaster and brings out predatory behavior. In fact, any system of organization will become a predatory disaster if the participants do not have some sort of moral code they follow. If you read P.J. O'Rourke's discussion of Adam Smith's Wealth of Nations, O'Rourke states that Wealth of Nations was Smith's second book and Smith's first book, A Theory of Moral Sentiment (I think that was the title), was about why do we care about someone else's feelings. O'Rourke says people now only remember Wealth of Nations but nothing in that book can function without the morality that Smith discusses in his first book. And that Smith and his contemporaries knew this and expected society knew that and would remember that too.
We humans are not inherently logical. And in my own opinion, the more primitive and powerful a concept or practice is, the less willing we are to acknowledge that because we don't like acknowledging how much of our brain is something our conscious mind can't easily see yet can and will greatly affect the conscious mind. When societies try to throw away old illogical practices like ritual or religion which helped support the commonly accepted moral code, great problems follow. Communism is a system which throws away old practices because they are illogical or counter to the revolution and the French Revolution in some of its crazier ideas went down that road too. Disaster usually follows. It is usually intellectuals and artists who are most convinced that throwing away these old archaic notions will only benefit everyone, and unfortunately they are often very persuasive in their arguments and also usually they are very unprepared for how awful things will become once the old rules are thrown out and the new rule is "whatever you can get away with."
I believe that in the U.S. there is a real push to move back from the extremes and get back to a system that has more resilience and has more people willing to say "before we try your amazing new idea, let's look at what is likely to happen if you're wrong and let's also look at whether you've done any work to prepare for the possibility you're wrong."
Great comment. Thanks!!
I share your diagnosis, but I fear that I cannot concur with your belief about a real push to move back from the extremes. For that matter, doing nothing more than curbing the current excessive influence of the extremes (both on the left and on the right, as well as in our culture overall) seems unlikely to provide a great deal of resilience in and of itself. Resilience for many of our institutions (and our culture in general) will demand a major restoration of redundancies and fail-safe measures that have been under continuous erosion for many decades. There are some of us who genuinely want to restore a foundational moral core to our body politic, but I am not convinced that we are likely to succeed at any time in the near future.
And the hidden loss is that the original guarantor/payor of the pension - the employer - is utterly off the hook a few years after the transaction due to the statute of limitations.
The risk is shifted, the employer waits 5 years (generally) and it is off the hook. The PE crooks will have paid out management fees and other sums to its "partners" that just about evens out the initial price and then continues to collect. Sweet deal to all save the pensioners who earned the money in the first instance.
The PE takeover of medicine, veterinarians, HVAC, and other small private businesses is a disaster: quality drops, investment drops, cash flow pillage.
Yes and in the case of medicine and vet care, all the more jabs to push. Including self-amplifying (shedding) vax that they’re now giving to pets.
Per grok:
As of July 2025, approved veterinary self-amplifying mRNA vaccines include:
- Merck Nobivac NXT Canine Flu H3N2 (dogs, against influenza; USDA-approved 2024)
- Merck Nobivac NXT Rabies (dogs and cats, against rabies; approved in US/Canada 2024)
- CEVA RESPONS A1 H5 (ducks, against avian influenza; France-approved 2024, valid to April 2025)
Others are in trials or preclinical stages. Consult vets for availability.
https://x.com/NicHulscher/status/1949471706491314364
Thank you for putting a light on this. Most people know nothing about where their pension and insurance payments come from.
They don't want to know. They just don't want it to stop.
Of course, none of this is rocket science. If pension contributions are invested in a fund with managers who have a fiduciary duty - along with a moral compass to do the right thing - to ensure financial probity and reasonable returns on investment, nothing can go wrong, even if the company funding the pension fails. Although the recent trend in business is to close defined benefit pension plans and switch to 401-K plans with some employer match. Allowing private equity into the equation will, of necessity introduce risk into the mix that has no business being introduced into long-term retirement assets on which employees rely. And what of the thirst that the PE vampires have for 401-K assets? Maybe the best course would be to change the laws the allow PE to exist and prosper?
You hit the key concept: fiduciary duty. Rarely do we see lawsuits holding those who breached their fiduciary duty accountable. This is especially true in any instance or industry where limited partnerships are used. When the venture is profitable it doesn't matter. But when things go sideways or upside down....
But when things go sideways or upside down....
They look for a taxpayer bailout. Not for the defrauded investors and stakeholders but for themselves and their pals.
Imagine the dems version of BBB for the derelict states if they regain power in 28: big beautiful bailout. Or is it big bastard bailout?
I'd be right there with you, but only with guillotines in place for those who expose their lack of a moral compass and ruin people insodoing. This is what has been missing in this country for too long. So...
Agreed with most of what you say here. But the beef with PE, for many many years was that only wealthy people got to earn the kinds of hefty returns from investing in them. Many econo pundits called this grossly unfair to the little guy, who had no access to the PE deals due to the accredited investor rule. The little guy, whom I support because I am one, can't have a complaint "both" ways, however. Either it's unfair to be excluded from access to PE rates of return, OR, it's unfair to expose a Pensioner's future benefit payment stream to more risk than a US Government bond, but it can't be both.
But pensioners weren't limited to just government bonds. Many pension plans earned very good, market returns because they were run by seasoned pros who took their fiduciary duty seriously.
Pensions (defined benefit plans) are insured by the Pension Benefit Guaranty Corporation (PBGC). It pays out pennies on the dollar when pension funds go broke. They run deficits in the tens of billions of dollars every year and recent congressional legislation was needed because funds would run out in 2026.
We can never re-industrialize unless we first get rid of our financialized/privatized economy. Private banks have to be removed.
If you want PE's model for business acquisition read how Bed Bath and Beyond failed.
"Show me the incentives and I will show you the outcomes."--Charlie Munger.
PE is taking over pensions and annuities not only through transfer agreements, but simply by getting pension funds and insurance providers to invest in their firms, and now in their shares. The gullibility of pension funds board members, often elected teachers, police, and firefighters with no special financial chops, leaves them vulnerable to the direction of the investment consultants they hire, who work hand in glove with the big money such as PE. Those teachers, police, and firefighters are sometimes also open to the goodies that the money side of things can do for them--from junkets to tickets to invitations to post-retirement jobs.
I witnessed this firsthand, working in the 2010s for a large state/local government with big pension finance problems. As part of my duties, I attended pension fund board meetings and got the investment reports, and saw the presentations by the consultants. You could follow the fads, and you could look at the portfolios and sadly sigh.
Economists call it "the principal-agent problem." The principals, in this case the pension fund board, have a primary goal to ensure promised benefits to the members. The agents that they hire--investment consultants and advisers and PE funds, have completely different goals. Reality exists in the gap between those different incentives and goals.
The main thing for the outsider to know about PE is that it is a "friends and family" enterprise, and if you are neither, there is no reason to think you will be offered participation in the good deals. There is "smart money" and there is "dumb money." Both are welcome, but smart money is treated with respect, dumb money not so much.
There is a very old saying in poker, that goes something like, "If after a half hour at the table you still don't know who is 'the mark,' it's you." PE is like that. If you study the contract(s) you are signing and cannot tell who is structurally being taken advantage of, it's you.
Another old saying, about business partnerships, which is what most PE deals are: "At the start, the General Partners have the knowledge and the Limited Partners have the money. At the end, that is reversed."
Or, colloquially, "There's a sucker born every minute."
https://quoteinvestigator.com/2014/04/11/fool-born/
And, "Never give a sucker an even break."--WC Fields movie by that title, 1941
Try not to be the sucker.
Pension benefits often used to collapse when companies changed hands (often so as to steal the pension money). After this happened repeatedly stealing the pensions of many Big Company retirees, Congress finally stepped in:
"Congress and the legality of altering pension plans
It is not illegal for a company to terminate a pension plan, provided they follow the established legal procedures.
However, the Employee Retirement Income Security Act (ERISA) of 1974 set minimum standards to protect worker's pension benefits. ERISA requires that:
Plans be adequately funded.
Fiduciary duties be upheld by those managing the assets.
Participants receive detailed plan information.
A grievance and appeals process be in place.
The Pension Protection Act of 2006 (PPA) further strengthened these regulations by increasing the funding requirements for defined benefit plans and addressing issues related to underfunded pensions. The PPA was enacted on August 17, 2006.
Key aspects of ERISA and PPA
ERISA laid the groundwork for safeguarding pension benefits and established the Pension Benefit Guaranty Corporation (PBGC) to insure pensions.
PBGC guarantees payment of basic pension benefits in private-sector defined benefit pension plans, up to a maximum amount.
The PPA aimed to close loopholes that allowed companies to underfund pension plans and introduced stricter regulations to protect retirement accounts.
In essence, while companies can terminate pension plans, they are bound by laws like ERISA and the PPA to ensure that the process adheres to strict guidelines and protects the pension benefits of employees and retirees. "
Lots of money in pensions and PE plans are just the latest iteration for stealing that money.
Life insurance companies are soulless bloodsucking leaches too so tell me why should we care which soulless bloodsucking leach sucks us till there is nothing left? The people who we have elected to protect us have always sold their services to the highest bidder. Ever see a poor life insurance company? Hell if you want to make good money sell whole life insurance policies to parents of kids on the kids life.
"why should we care which soulless bloodsucking leach sucks us till there is nothing left"
That's why the problem of our times is not about managing capitalism vs socialism. After all, *each* allows 'soulless bloodsucking leaches' to rape the weak; the former openly and organically, the latter via totalitarian shocks from two-faced dictators crowing about 'democracy'. The actual problem of our times is society's management of psychopathy vs empathy.
It would seem there are more than a few "soulless bloodsucking leaches" on this very thread, who made their careers in previous (or even current) permutations of the never-ending con of dumping risk and loss on taxpayers and people.
They appear to be quite pleased with themselves.
May they rot and burn in Hell.
Fiduciary duty and PE seem to be incompatible concepts. Why on earth would we permit PE into these realms?
But as we have seen with our own eyes, there are no angels among those employed at the PBGC. And there are no angels among the judges who adjudicate PBGC cases. The United Airlines bakruptcy case comes to mind, where the judge let off the PBGC's obligation to United's rank and file workers to something like 50 cents-on-the-dollar.
Ask Calpers
Eric Salzman is on target with his assessment. If things continue on the course they are on now the Federal Government will ultimately have to print a lot more money. Many years of regulatory failure at both the state and federal levels have life holders of life insurance and annuity products at risk. Aggressive sales of complex variable annuities have led to huge liabilities that are offset by insurance company so-called reserves. It's common for insurance companies to transfer significant amounts of the liabilities to reinsurance companies for a portion of the premium income. The guarantee the reinsurance companies will pay those liabilities is only as good as the assets the reinsurance companies have to back it up. There is the PBFC which is not legally required to be funded by the federal government if there was an asset crash. And then you have state and municipal pensions which our government has allowed to be dangerously underfunded for decades. That will be the first to go.
How does one find out if their pension fund will be or has been sold to PE? Tx
I 2nd this question.
Not because I have a pension fund, but because everyone should be versed in how to find out what PE has it's dirty hands in
You will receive a notice of the transfer from your employer. Your monthly payments will also come from the insurance company once the PRT occurs- you’ll see it on your check.
Thanks for keeping us up-to-date on this crap. My former employer simply dissolved their pension plan, skinny as it already was. Hmmm…
This is an unnecessarily one-sided presentation of a complex topic. Imagine what the author could do with the simple risk opportunity presented by the issuance and investment in equities.
Let's hear some industry comment.
It is trash. And I am sympathetic to the argument against PE firms taking over insurance cos. But this is not serious writing on the subject.
I was thinking the same think. Not that the discussion is without merit, but hearing both sides is more informative.
Strange that you fail to mention the funded status of any of these transferred pensions. Perhaps the most relevant detail and you somehow missed it.
Also you either missed or failed to grasp that a major reason for PRTs is the fixed cost of PBRC insurance. Subscale pensions are inefficient and for fewer dollars go to beneficiaries when they are eaten up by fixed costs. Staff and operations are a part of this, too.
This is populist dribble and not serious reporting.
Here is the populist McKinsey & Co on the subject
https://www.mckinsey.com/industries/private-capital/our-insights/why-private-equity-sees-life-and-annuities-as-an-enticing-form-of-permanent-capital
I am just pointing out the risks involved in this movement. With regard to your fully funded comment, you are right. I actually had the steps of a PRT....it was edited out and I did not catch it.
What judges, federal or otherwise, have the background and bandwidth to grok what is going on in private equity-insurance world? Maybe one - maybe none