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IPFS News Link • Pensions

"Financial Vandalism" of Low and Negative-Yield Bonds Wreck Pension Plans

•, by Mish

Pension World Reeling

Most US pension plans assume returns of six to seven percent. They have shied away from government bonds because yields have been too low.

Bloomberg reports Pension World Reels From 'Financial Vandalism' of Falling Yields

A once-unthinkable collapse in global bond yields is forcing pension funds to buy bonds that offer negative returns -- putting the financial security of future retirees in jeopardy.

U.S. institutions managing trillions of dollars in retirement savings -- including the California Public Employees' Retirement System -- have been ratcheting down return expectations. Japan's Government Pension Investment Fund, the world's largest, has warned that money managers risk losses across asset classes. In Europe, pension funds may be forced to cut benefits in part thanks to the decline in rates.