Wednesday, December 7, 2016

Pension Crisis Intensifying As Dollar Rallies and Interest Rates Rise

Public pensions from from New York, New Jersey, Illinois to California (see below) and everywhere between are underfunded and failing (1,2). Shifting demographics and unrealistic expectations for future returns for funds loaded with public sector debt in a rising yield environment is threatening insolvency of some of the largest public pension funds in the United States.  While a growing minority is withdrawing money from these funds in anticipation of insolvency, the majority still believes that the government will take care of them.  This will change as the crisis intensifies as the dollar rallies and yields continue to rise.

Headline: Stanford University's Pension Tracker Pegs Total California Pension Debt at $1 trillion or $93,000 Per California Household in 2015, Up 19% from 2014

Stanford University’s pension tracker database pegs the market value of California’s total pension debt at $1 trillion or $93,000 per California household in 2015. (see SIEPR video above for a quick summary of the database and how to use it)

In 2014, California’s total pension debt was calculated at $77,700 per household, but has increased dramatically in response to abysmal investment returns at California’s public pension funds that hover at or below zero percent annual returns.



Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.