Elizabeth Warren busts Goldman-Sachs for handling of union pensions

[think]

Elizabeth Warren busts Goldman-Sachs for handling of union pensions

By Mark Sumner
Friday Apr 22, 2016 · 2:39 PM CDT

Goldman-Sachs and Northern Trust ​charged the Teamsters Union $41 million in fees for handling the beleaguered Central States Pension Fund. The same pension fund where 400,000 retirees are facing drastic cuts.

What did the fund managers do to earn their millions? They put the fund in unnecessary danger through risky investments.

Elizabeth Warren
?@SenWarren
Goldman Sachs & Northern Trust got $41M to manage workers’ pension funds, & they recklessly gambled it on junk bonds & toxic mortgages.

The decisions that Goldman and Northern made, along with an Act slipped into the 2014 budget, directly led to this.

James Lambert, 69, a former trucker, from Randolph, Ohio, was told his $2,200 monthly pension payment would be slashed to $1,200.

Bob Berg, 61 … was informed that his monthly payment would drop from $3,000 to $2,200.

And Judy Weeks, 62, ... would drop from $3,000 to $1,258.

Warren speaking on the Central States Pension Fund.

Read more:
http://www.dailykos.com/stories/2016/4/22/1518892/-Elizabeth-Warren-busts-Goldman-Sachs-for-handling-of-union-pensions

[SheilaT]

1. Pensions, and the gross mismanagement of them

should be covered more. I am probably not the only person here whose pension was cut drastically (in my case by two-thirds) because of this. In my case, the company I used to work for declared bankruptcy more than once, and was able to get out from under its pension obligations. My pension currently comes from the Pension Benefit Guaranty Corporation. I'm lucky in that I never expected that pension to be a significant part of my retirement, but others did and they are hurting.

More recently state and municipal pensions are under attack. People who perhaps could have earned more money in the private sector worked in the public one instead, in no small part for the good pensions that were offered. And now they're being treated as if they are pirates, somehow robbing the rest of us to enrich themselves.

What I find most disturbing about the demonization of public sector pensions is that I know I read as far back as the 1970's that the various government entities were not properly funding their pension, something that was predicted even then to come back to haunt them.

Soon all military pensions will become suspect.

And so it goes.

[Recursion]

5. That's why I'd never want a defined-benefit pension

Just too many eggs in one basket there for me.

[SheilaT]

6. There was a time when a defined benefit pension

was the gold standard. Unfortunately, companies have been allowed to get away with systematic underfunding of those pensions -- something that regulation (gee, what a terrible word, regulation) could have prevented.

As for too many eggs in one basket, a lot of 401k plans are exactly that. One of the things that happened in the whole Enron thing was that employees could only put their 401k into Enron stock, and the entire company essentially became a Ponzi scheme. Upper management pulled their money out, even as the employees were forbidden to do the same.

Diversity in investments has always been a good idea.

[Recursion]

10. No there wasn't

There was a time when people thoughtit was the gold standard, and a lot of them are getting their benefits cut now. Personally I've never trusted any company I work for enough to even consider relying on a defined benefit scheme.

Give me a matching individual account any day: that way no matter what happens to the company, it doesn't affect my retirement savings.

[SheilaT]

11. During the peak time of the defined benefit a person could

absolutely count on that money during retirement. Often it was a significant percentage of your final salary. It was a gold standard.

The real problem, the one that most people don't understand when they talk about the good old days of those pensions, is that far fewer than half of all workers were covered by them. I think the highest number was 38% of the work force. One huge problem was how long it took to be vested, and the lack of portability. A corollary problem was that they often died with the pensioner. Sometimes that's how they were set up in the first place, but as often the pension holder just didn't understand that it might be a good idea to take a smaller payout up front so that his widow (and this was almost always how it happened) would continue to get money after he died.

However, you are wrong to think the individual account can't lose money. Look at Enron. Their employees' 401ks were invested almost totally in Enron stock, and when the company failed, so did their retirement money. Poof. It was gone. Investing our 401k in company stock isn't a very good idea for the most part, but some companies give you no option.

[Recursion]

12. And if the company directs how you invest it, it isn't an IRA

I can't ever think of a reason I would put any retirement money in my employer's stock. Just seems crazy.

[SheilaT]

13. You are right that it's crazy.

Well, putting all of your retirement account into your company's stock is what's crazy, but putting maybe 10% probably isn't.

But those unfortunates at Enron were supposedly doing everything right: putting aside a reasonable portion of their wages into the company retirement plan and watching that money grow quite nicely over the years. Most people are quite uninformed about how to invest their retirement savings, plus Enron had them locked in: they could (if I recall correctly) only buy company stock and they essentially couldn't sell it.

Saving outside the company plan, especially in a Roth IRA, can be very good, so long as it's invested well. There are many ways to do that and I'm not myself an investment advisor so I'm not about to give specific advice here.

But the stock market goes down as well as up, and a smart investor takes that into account. You have to understand that your investments can shrink, and shrink by quite a bit. I've been investing long enough, about 40 years, that I'm very aware of those ups and downs. I have an excellent investment advisor, my money is well diversified, and I try to live below my means. So far, so good.

[left-of-center2012]

2. Uh oh! No V.P. run with Hillary n/t

[Barack_America]

3. This might have been her polite, "no thank you".

[senz]

16. + 1

[scottie55]

4. Pssssst Elizabeth - 32 Trillion In The Tax Havens

Just waiting for the tax collector to use to rebuild our crumbling country, and update our energy generation into something that won't kill our children.

[NBachers]

7. I have to ask this: Was a "gratuity" given to union officials in return for investing with GS

and Northern?

[SHRED]

8. Good question

I'll ask my former Teamsters Business Agent. He's localized here in SoCal so I'm not sure he'll know.

I'm a former Teamster Chief Steward in a small city's public services department.

Nothing near the big national stuff though.
.

[SHRED]

9. I asked...

...Why the heck the Teamsters were invested with GS and NT.
I also asked if his pension was in jeopardy.

He is a good man who has worked his adult life representing workers. Many who never appreciated him.

I have lived the good side and bad side of a union.
Trust me...there's way more good side than ever makes the news.

[think]

15. Yes indeed. /nt