Global Pension Crisis Unfunded Liabilities and How We Can Fill the Gap

by Marin, Richard A.; Frank, Robert H.

• ISBN13: 9781118582367
• ISBN10: 1118582365
• Edition: 1st
• Format: Hardcover
• Copyright: 2013-10-14
• Publisher: Wiley

Summary

A comprehensive look at the crisis of unfunded pension liabilities and what must be done to avoid the same problem in the future

As the generational bubble of the Baby Boomers begins to retire, it is increasingly evident that governments, corporations, and individuals have failed to adequately prepare for the obligations and needs of this giant cohort. Retirees are outliving actuarial life expectancies, pension liabilities are skyrocketing, pension plans are underfunded, and medical costs rise, the United States alone can expect unfunded liabilities to exceed $4 trillion.

Even while the American economy shows signs of sustained recovery, states and local governments will still experience sharp increases in pension fund payments through the next year or longer. Global Pension Crisis looks at this situation and offers practical advice for retirement plan managers and financial advisors, while also explaining how to strengthen pensions and prevent similar crises in the future.

• Offers a clear and comprehensive explanation of the current pension crisis for retirement fund managers, financial advisors, and economists
• Includes prescriptive guidance on how to strengthen the pension fund system and prevent another similar crisis
• Written by venture capitalist, entrepreneur, and former senior Wall Street executive Rich Marin

Author Biography

Richard A. Marin is a former Wall Street executive who currently serves as President and CEO of the New York Wheel project. He teaches finance and asset management at the Johnson Graduate School of Management at Cornell University, where he is a Clinical Professor of Asset Management. He is the founder of Beehive Ventures, a venture capital fund, and Ironwood Global, a distressed mortgage hedge fund.

Table of Contents

Preface

Acknowledgments

About the Author

Chapter 1 Your Worst Nightmare

The Family

The Work

Where Does That Leave YOU?

Chapter 2 Dimensioning the Problem

Calculating the Sufficiency of Savings

Chapter 3 You Can't Build Your Walls High Enough

The Problem of Retirement Income Security

Generational Warfare over the “Privilege Gap”

Feeding the World

Post-Crisis Policy Adjustments

The Demographic Monster Stalking Us

Chapter 4 Money Matters

Enter Modern Portfolio Theory

The Search for Alpha

The Age of Derivatives

The Birth of Hedge Funds

Alpha/Beta Separation

The Origins of Alpha

Static versus Dynamic Assets and Liabilities

Summing Up

Chapter 5 Reinventing Retirement

Defined Benefit Plans

Defined Contribution Plans

Who’s the Client After All?

The Changing Landscape

The Perfect Storm

Chapter 6 Alternatives Are Not Only for the Rich and Famous

Pension Assets and the Move towards Alternative Assets

The Great Hedge Fund Debate

The Institutionalization of Hedge Funds

Chapter 7 The Long and the Short of It…Trust Me

Alpha from Operations

Operational Risk

Securities Lending History

The Securities Lending Market

Securities Lending Flow, Process and Mechanics

Ratio Lending

The Re-Hypothecation Two-Step

Chapter 8 Liability Driven Alpha

Painting the Recent Pension Landscape

Risks

Basic LDI Guidelines

Chapter 9 Power Tools for Pensions

Pension Benefit Guaranty Corporation

Factors Affecting the PBGC Insurance Programs

Plan Terminations

Pension Risk Transfer

Synthetic Mutual Fund Notes

The Role for Pension Funds

The Yale Model (The Illiquidity Premium) versus the All Weather Model

Chapter 10 The Poverty of Nations (Apologies to Adam Smith)

Is There a Path to Salvation?

The Chilean Terrarium

Chapter 11 The Ultimate Solution

The Nation, State, Municipality and Company

You as an Individual

Chapter 12 A Peaceful Night's Sleep

What Our Family Looks Like Now

Concluding Thoughts

Works Cited

Index