THE UGLY PENSION TREND

The Arkansas Teacher Retirement System has sued Allianz Global Investors, charging the financial management firm pursued a “reckless strategy” during the economic shutdown that cost the pension fund $800 million.

The retirement fund says Allianz’s Alpha Funds made bets that investment markets would not lose money during the shutdowns in an attempt to cover losses due to the same strategy the company followed in February.

After losing 8.5 percent in February, the S&P500 lost 12.5 percent in March.

The pension fund contends that Allianz should have managed money for safety instead of to lose money if markets fell further.

In doing so, Allianz did not just make a “bad call” but abandoned risk controls that should have buffered the pension fund’s principal, the suit charges.

Allianz said the suit “mischaracterized” the company’s behavior and “there is no basis for legal liability.”

TREND FORECAST: We noted this particular pension fund incident since it is part of a much bigger trend. Beyond losing pensions as a result of bad investments – which we forecast will sharply accelerate as equity markets and currencies collapse – with nations, states, and cities going down and going broke, there will not be enough tax revenue to cover government employee pensions.

5 Comments
  1. onlyme 1 week ago

    I feel this is an extremely important crises, not only for government employees but all retirees. Put this with the U.S. Market Front Trends and you have a major component of Bill Gates population reduction.

  2. Craig Bradley 1 week ago

    WHEN “ROBOT”-ADVISORS FAIL

    Allianz Institutional Account Managers use a variety of investment tools which include various software programs or algorithms. These programs guide investment managers in picking holdings and allocating risk assets and managing risk. None of these software tools really work in a situation where you get a quick and hard market crash or drawdown like we recently experienced. So, expecting them to go partly to cash on their own at the right time ( Late January, for example) is not a realistic investor expectation.

    The portfolio management program will keep you in the market at the previous portfolio allocations. What always happens is portfolio managers all go to cash later and then forego the rebound in market Indices. So, correctly timing a move to cash both ways ( In and Out) is seldom realized. Sometimes you get lucky but its not the rule. Either you are all-in or you are out. Unless you can prove a breach of Fiduciary Duty by Allianz Managers, you may not have much of case.

  3. john_8 1 week ago

    LOL. They have pensions. The rest of the sheeple (who pay their salaries) either gamble with their 401Ks in stocks (which are well due for a decline) or put the money in “safe” instruments that pay returns well below the rate of inflation (thanks FED!).

  4. JustSayin 6 days ago

    It’s their job to protect pensions – no excuses!

  5. AlvaroCarazo 2 days ago

    Its not the first suit and for sure will not be the last. Attorney’s working to increase knowledge of pension plan laws.

    Hold on to your hats. Hope someone got investment insurance.

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