How the Teamsters pension disappeared more quickly under Wall Street than the mob

[ZiprHead]

https://www.marketwatch.com/story/how-the-teamsters-pension-disappeared-more-quickly-under-wall-street-than-the-mob-2016-04-04

Real estate investments in Las Vegas casinos and hotels once threatened the integrity of a Teamsters pension fund that the federal government wrested away from corrupt trustees and organized crime after five years of legal battles.

A quarter-century later, the professionals who replaced them—Central States Pension Fund administrators; the Goldman Sachs & Co. and Northern Trust Global Advisors fiduciaries; and Department of Labor regulators—stood watch while the financial markets accomplished what the mob had failed to: which was to smash the fund’s long-term solvency with massive money-losing investments.

The debacle unfolding at the $16.1 billion Central States fund in Rosemont, Illinois, is a cautionary tale for all Americans dependent on their retirement savings. Unable to reverse a decades-long outflow of benefits payments over pension contributions, the professional money managers placed big bets on stocks and non-traditional investments between 2005 and 2008, with catastrophic consequences.

When the experiment blew up, rather than exhume the devastated portfolio to better understand the problem—and perhaps seek accountability—Central States administrators lobbied Congress to pass legislation giving them authority to cut retirement benefits by up to 50% after Treasury Department approval.

 

[marc]

Brings to mind the movie The Other Guys, which parodies police action movies. One cop keeps hoping the leads they get will lead to drug smugglers, mobsters, terrorists or something like that, but the real villain is a broker looking to get the NY Police department to invest their pension fund with him, so he can use it to pay off his debts from earlier bad investments.

Closing credits include a lot of facts about the real crimes going on.

 

[T.G.G. Moogly]

There are equities and there are equities. And wtf are non-traditional investments?

 

[Loren Pechtel]

Is this due to who is running it or is it due to underfunding?