J.P. Morgan advises select clients of massive underfunded pension liabilities

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J.P. Morgan Chase just advised it’s clients that they hold 15.1 million shares in the New York State Common Retirement Fund and 10.7 million shares in the New York State Teachers’ Retirement System currently valued at over $237 billion. They also reported extremely serious shortfalls in funding of state and local pension systems, that if not addressed, could have a devastating effect on financial markets.

Caused by over generous, unsupportable commitments to public employees and unrealistic earning assumptions, State Comptroller Thomas P. DiNapoli just announced a $2 billion shortfall. How serious? Associate Professor Joshua D. Rauh, from the Kellogg School of Management – Northwestern University advised members of the U.S. House Judiciary last year that “without reform (which in itself another subject) many large state pension funds will run dry, even if they achieve predicted 8% investment returns.” He further mentioned that the taxpaying public will bear a large share of a massive burden of underfunded legacy liabilities associated with state pension plans.

I see no evidence of this concern on the plates of our legislators. Stay tuned in. Hal Peterson




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