Pension Plan Discrimination? - 3M to scrap Pension Plans for non-union employees

Given that Top/Chief/Senior Executives often/usually benefit from better Pension Plans (as well as Medical Benefits and Incentive Plans) is it acceptable that 3M takes this one step further and intends to scrap  its pension plans for non-union employees?

Anyone still thinks that investment fiduciaries should run Corporate Governance?

Who are the 90% that waved through Lloyds Bank CEO Horta-Osorio's pension? The missing link in the whole debate about corporate governance, and inequality in particular, is the lack of any control that real end investors - the man/woman on the street whose savings are at stake - have over the actions that fiduciaries (and fund managers do NOT own any shares!). And make one guess how fund managers associated with Lloyds Bank voted.
(18-May-2019)
Lloyds wins backing for CEO’s pension — but 10% of shareholders dissent

Dual-class voting shares - are our Fiduciaries standing firm?

Canny insiders - with the help of advisers among investment banks - are steadily eroding shareholder rights. There is opposition but it is piecemeal and split. Reality is, if the major fiduciaries in the asset management business would get together and put their feet down this unhealthy development would be stopped very quickly. I would not go so far as to call these structures the biggest threat to financial markets but they are just one more factor behind the continuous increase in Inequality.
(27-Mar-2019)
Dual-class structures biggest threat to financial markets

Pension Apartheid is alive - Equifax CEO leaves with $18 Mio

Juicy Pensions for the Few (Marketwatch)
(28-Sept-2017)

Saudi Aramco IPO - suitable for Widows and Orphans?

Does it really matter where the listing takes place? The more important question must be - given the negligable influence of public shareholders, the uncertainty over the future energy scenario and the huge political risk surrounding the Middle East region, including Saudi Arabia itself, can regulators allow this IPO to end up in the portfolios of savers and pensioners? Of course, the financial intermediaries and Saudi Arabia's oligarchy would laugh all the way to the bank!
http://www.marketwatch.com/story/saudi-aramco-2018-ipo-plans-slowed-over-where-to-list-2017-06-14

Airbnb has no specific plans for IPO yet: CEO Chesky

Thank God for that. The IPO market is a huge destroyer of wealth - for the deplorables that are herded into overvalued new issues while the 0.1% run away with the proceeds. Perversion of Shareholder Democracy. And the retirement savings crisis will not be solved that way either.
Airbnb has no specific plans for IPO yet: CEO Chesky

Carlyle Private Equity practices under fire

Seeking profits is what drives private business. But there have to be moral and ethical rules to contain this powerful motive. When a narrow group of people and their anonymous backers in the financial investment community treat employees and the wider public in a way that raises questions they put the whole Private Equity business model under a cloud. After all, the business operates under rules set by legislation and these rules can and should be altered when the model produces one-sided results. (12-March-2017)

Carlyle's Final Screwing of Brintons' Family & Employees

Google to pay $3.2 bio for a company with revenues of.....$15 mio

Another sign of how unhinged the market for technology companies has become is this transaction where Google agrees to pay an absurd multiple for a tech start-up. Apart from the question whether or not this decision is commercially sensible (not even mentioning the privacy problems it might create) it also raises the issue of how much control shareholders should have over any sizable spending on acquisitions. That our pension systems are supposed to rely on a sort of ponzi-finance that equity markets have become (and an engine for wealth generation that is benefiting above all the 0.001 percent) is another prickly issue for politicians and regulators. Buying 'assets' at astronomical multiples is certainly not the right way for any pension system to match its liabilities to ordinary people.
(14-Jan-2014)

Stop Pensions Apartheid!

The British Prime Minister David Cameron refuses the growing calls for former banker James Crosby to give up some of his £20 million pension pot.

Another sad end to a 'Private' Equity buyout

Exaggerated claims about the advantages of the 'Private' Equity business model receive another dampener from news that the former British Printing Company which sailed under the name of Polestar UK for the past years has left the UK Pension regulator (clear text: the British Taxpayer)  with a massive bill to safeguard the pension scheme. Where are now the financial acrobats that benefit massively from the 'Private' Equity compensation model, where are the (mostly) anonymous investors who wash their hands when things in the funds they back go wrong?
(29/10/11)

Cavalier attitude towards pensioners

The provision of pensions for ordinary citizens (not the executives and politicians who allow themselves gold-plated schemes) is becoming more pressing by the day in most western 'democracies'. That relying on government-sponsored regulators offers little hope - and even less help - is demonstrated by instances where venture (vulture?) capitalists or those whose primary activity is shuffling around corporate assets can escape from their obligations toward their past and present workers in order to maximise their personal profits.
(03/06/2011)

Pension Risk transfers - who monitors the Risk?

A report by Hymans Robertsons documents the trend in the United Kingdom towards shifting the risk borne by companies offering final salary pensions to insurance companies and banks. One can only hope that these companies are ready to survive the next financial tsunami. While they may be more stable in the long run than the companies that originally stood behind the pension obligations one has to wonder who really has the interest of the pensioners at heart. The companies on both sides of these transactions will above all be interested in the short-term boost to their profits, the managements will focus on the boost to their bonuses and will long be gone if ever one of these transfers runs into trouble. And the regulators? I think we all know the answer.
(23/03/2011)

Executive Pay - consultative vote not enough

There is disappointment among corporate governance activists in Switzerland who hoped that (purely 'consultative') shareholder votes about (top) executive pay would lead managements to moderate their greed. Novartis Chairman and CEO shows no shame when accepting a 'compensation' package calculated to be worth Sfr 25.3 million in 2010. Apart from the fact that combining the two top offices is already a dubious corporate practice the fact that he gets 'compensated' for accepting a no-compete clause is another slap in the face for shareholders - but also for other employees who generally do not get separate compensation if they have to submit to a no-compete clause in their employment. One should think that someone who certainly has a high degree of intelligence like Vasella would be perfectly able to make a decision whether or not to accept such a clause when accepting his basic pay package. That he gets substantial pay for 'retirement benefits' that are not necessarily aligned with the pension benefits of ordinary  employees is another contravention to fair play. Summing up we can say that these 'consultative' votes are a waste of time. We call for binding votes on top executive compensation and demand that all perks (health, pension, share options etc) are made available to all employees on a pro-rata basis related to basic salary. Even better, if top management is prevented from receiving discretionary bonus awards the whole discussion about annual votes on compensation would become superfluous.
(23/02/2011) 

Ireland, Hungary expropriate pension funds

The idea of putting one's savings into officially-sanctioned pension funds receives another serious setback when EU member states (or better their ineffective politicians) think that the only way they can save themselves from further fiscal and economic disasters of their making is the expropriation of pension funds that to all intents and purposes have been created to provide their beneficiaries with benefits during their years of retirement. Where are the regulators that are so busy sticking their noses into every aspect of our daily lives? Where is justice and democracy?

13/12/2010 

The future of Pensions - must reads for the concerned

Don't stop thinking about tomorrow by Con Keating

a few tasty morsels of wisdom:

"If the objective of government is the cessation of
provision of voluntary private sector occupational
pensions, it should say so. If not, it should not allow its
civil servants to adopt policies and practices which
ensure that this will occur."

The savings adequacy problemis compounded by the
fact that DC ‘pensions’ are just tax-advantaged savings
schemes which leave the individual exposed to risks
which are unmanageable"

And another paper well worth reading:
Tomorrow's investor: building the consensus for a People's Pension in Britain by David Pitt-Watson

07/12/2010

Pensions not secure from political meddling

Anyone who believes in the politicians' assertions that pension savings are safe from political meddling would be well advised to take note of news that Local authorities here in the UK are considering to use pension funds to finance infrastructure spending. To make matters worse, the citizens are deprived of any means to influence these decisions which could have a major impact of their standard of living during their retirement. We expect political pressure to raid pension funds to increase as the fiscal situation in most countries continues to deteriorate. (03/09/2010)

Executive Pensions: transparency not enough

The National Association of Pension Funds (NAPF) of the UK has written to FTSE 350 companies asking for more transparency over pensions for top executives. Unfortunately the letter does not call for directors' pensions to be cut but argues more clarity is needed so that shareholders can judge awards properly. Pro-Gov instead has long argued that all perks for top management - including pension schemes - should be made available to all employees on an equal footing - with contributions on a strict percentage basis related to basic salary. (25/06/2010)

Prudential: what deal has been agreed regarding capital adaequacy?

The pension system in this country to a large extent depends on private companies such as the Prudential to supply savers/retirees with a rock-solid guarantee that they will be there when and as long as they are needed. Deals such as the one just announced can at best be described as a stitch-up where the public is left in the dark about the exact terms and no one but the FSA, the quango in charge of protecting the interests or savers, investors and retirees, knows what standards are applied. Even worse, should a disaster occur and the provider get into trouble the government can simply walk away - even if the financial regulator made errors in assessing the financial health of the insurer. That shareholders are also kept in the dark is par for the course. As a German banker once famously said: Shareholders are stupid and insolent: stupid to invest and insolent to expect a dividend.

P.S.: It may amuse the reader that The Times has refused to publish a version of the above comment on its Website. We can only assume that we have touched a raw nerve and that the editors did not want to give the impression that they allow criticism of the authorities to be published on their site.

Time to restrict 'Private' Equity?

Once every so often the Wall Street Journal gives space to a voice that does not toe the party line. So it was refreshing to read an article that chimes with our view on the Private Equity business. We always argue that the name Private Equity is first of all a misnomer, it is not 'private' at all as most money comes from the public, mostly through fiduciaries like pension fund managers. The performance and fee structure is highly non-transparent (at least to those who are the real investors and risk takers), maybe that is the reason why the business calls itself 'private'. The PE model also allows compensation for the chosen few at the top of the pyramid to be hidden from scrutiny. There is no justification for this as the investor pool is roughly the same as in public equity. Taking control of whole businesses is also not the idea behind mutual investing on a fiduciary basis. This type of activity can be perfectly executed in the form of an ordinary company - private or listed - and the business should be taxed and regulated on the same basis. Only the lack of organisation on the part of public shareholders, investors and pensioners has allowed the development of the excesses that plague the private equity model. The economy ticked along perfectly well before the advent of the 'Barbarians' and will continue to do so long after this abuse has been checked. It is high time that the fiduciaries which channel easy pickings to the few at the expense of the many take their responsibilities seriously.

False assumptions behind Defined-Contribution Pensions

While the traditional employment-related pension (for ordinary mortals except molly-coddled public sector employees) is on the way to extinction, the solution dreamt up by the retirement industry (with the connivance of politicians) offers a very poor substitute. To expect people to successfully manage their retirement nest-eggs in the shark-infested waters of the global investment markets would be the same as expecting someone to perform brain surgery on himself. A lot of investment activity is structured on the premise of a zero-sum game where someone's winnings are dependent on the fact that someone else is losing. Most active investment management - and certainly the whole universe of derivative dealing and alternative asset management - is nothing else but a redistribution of wealth. In addition, the running of the casino is extremely costly and puts a serious drain on investment returns.