Author: Mary Pat Campbell

Pension Relief Plan in COVID-19 Stimulus Bill That Passes House

Mary Pat Campbell

Link: https://www.ai-cio.com/news/pension-relief-plan-covid-19-stimulus-bill-passes-house/

Excerpt:

On Saturday, a measure to give troubled multiemployer pension plans assistance from the Pension Benefit Guaranty Corporation (PBGC) passed the House of Representatives, as part of a larger $1.9 trillion coronavirus relief package from President Joe Biden. 

The federal stimulus package, which includes $1,400 checks for many Americans and increased funding for vaccines, also holds the Emergency Pension Plan Relief Act of 2021 (EPPRA), an update to the Butch Lewis Act. It’s a bill that lawmakers expect will help stabilize the multiemployer pension plans that are in danger of insolvency. 

Of the more than 10 million multiemployer plan participants, about 1.3 million are in plans that will soon run out of money. 

Author(s): Sarah Min

Publication Date: 1 March 2021

Publication Site: ai-CIO

Green pass: how are Covid vaccine passports working for Israel?

Mary Pat Campbell

Link: https://www.theguardian.com/world/2021/feb/28/green-pass-how-are-vaccine-passports-working-in-israel?mc_cid=0edceb332a&mc_eid=983bcf5922

Excerpt:

In Israel, there is concern that the unvaccinated population, whatever their reasons, will be left behind or shunned. Small protests warning that green passes create a new hierarchy in society have been held.

Fresh ethical questions were raised last week when the Knesset, the country’s parliament, agreed to give local authorities personal details of unvaccinated residents to help them carry out targeted inoculation campaigns. Tamar Zandberg, a lawmaker, said it was a “slippery slope” for personal privacy.

Author(s): Oliver Holmes, Quique Kierszenbaum

Publication Date: 28 February 2021

Publication Site: The Guardian

5 Pandemic Mistakes We Keep Repeating

Mary Pat Campbell

Link: https://www.theatlantic.com/ideas/archive/2021/02/how-public-health-messaging-backfired/618147/?mc_cid=0edceb332a&mc_eid=983bcf5922

Excerpt:

Five key fallacies and pitfalls have affected public-health messaging, as well as media coverage, and have played an outsize role in derailing an effective pandemic response. These problems were deepened by the ways that we—the public—developed to cope with a dreadful situation under great uncertainty. And now, even as vaccines offer brilliant hope, and even though, at least in the United States, we no longer have to deal with the problem of a misinformer in chief, some officials and media outlets are repeating many of the same mistakes in handling the vaccine rollout.

….

Amidst all the mistrust and the scolding, a crucial public-health concept fell by the wayside. Harm reduction is the recognition that if there is an unmet and yet crucial human need, we cannot simply wish it away; we need to advise people on how to do what they seek to do more safely. Risk can never be completely eliminated; life requires more than futile attempts to bring risk down to zero. Pretending we can will away complexities and trade-offs with absolutism is counterproductive. Consider abstinence-only education: Not letting teenagers know about ways to have safer sex results in more of them having sex with no protections.

Author(s): Zeynep Tufekci

Publication Date: 26 February 2021

Publication Site: The Atlantic

OMERS Reports First Annual Loss Since Financial Crisis

Mary Pat Campbell

Link: https://www.ai-cio.com/news/omers-reports-first-annual-loss-since-financial-crisis/

Excerpt:

Canada’s Ontario Municipal Employees Retirement System (OMERS) reported a 2.7% loss last year, well off its benchmark’s return of 6.9%. It’s the first time the pension fund has seen a loss since the financial crisis of 2008.

As a result, the fund’s total net assets declined to C$105 billion ($82.4 billion) from C$109 billion. The fund also reported three-, five-, 10-, and 20-year annualized returns of 3.7%, 6.5%, 6.7%, and 6.0%, respectively.

Author(s): Michael Katz

Publication Date: 1 March 2021

Publication Site: ai-CIO

As Wall Street Migrates to Florida, Hedge-Funders Move to Offload Manhattan Homes

Mary Pat Campbell

Link: https://www.wsj.com/articles/wall-street-moves-to-florida-nyc-real-estate-11614020268

Excerpt:

Real-estate veterans and hedge-fund executives believe a seismic shift is under way, one that is moving vast amounts of Wall Street wealth from New York to South Florida. For the past several years, Wall Street has been colonizing the Sunshine State, attracted to more favorable tax policies and sunnier climes. And the momentum is only accelerating amid the pandemic.

….

While prices are under pressure in New York amid an oversupply of high-end condominiums on the market, price tags in Palm Beach and Miami appear to be on an unstoppable upward trajectory.

Last week, private-equity executive Scott Shleifer, a co-founder of Tiger Global Management, paid over $120 million for an oceanfront mansion in Palm Beach, setting a price record for the state. New Jersey hedge-fund executive David Tepper is also in contract to buy a $73 million house on the ocean nearby, The Wall Street Journal reported.

While he maintains a $238 million home in New York and another luxury condo in Chicago, Citadel founder Ken Griffin has also been on an acquisition spree in South Florida, spending hundreds of millions of dollars to buy land in Palm Beach and Miami, and is opening an office in Miami.

Author(s): Katherine Clarke, Cara Lombardo

Publication Date: 22 February 2021

Publication Site: Wall Street Journal

Nasdaq Amends Its Diversity Plan

Mary Pat Campbell

Link: https://www.wsj.com/articles/nasdaq-amends-its-diversity-plan-11614547707

Excerpt:

We have listened closely to all the feedback, and we’re making some changes to strengthen our proposal in response. For example, we heard from companies with smaller boards, as well as from several small-cap investors, that meeting the diversity objective would be more challenging for them. As a result of that feedback, we’re now proposing that companies with five or fewer directors may satisfy the recommended objective with one director from a diverse background rather than two. We’re also providing a one-year grace period in the event a vacancy on the board brings a company under the recommended diversity objective.

Overall, our proposal seeks to demonstrate that, with proper disclosure and clear objectives, companies and investors can create momentum toward an approach to capitalism that offers more opportunity to more people. We believe this can be accomplished through a market-driven solution — rather than government intervention.

Author(s): Adena T. Friedman, president and CEO of Nasdaq Inc.

Publication Date: 28 February 2021

Publication Site: Wall Street Journal

Bond-Market Tumult Puts ‘Lower for Longer’ in the Crosshairs

Mary Pat Campbell

Link: https://www.wsj.com/articles/bond-market-tumult-puts-lower-for-longer-in-the-crosshairs-11614517200

Excerpt:

A wave of selling during the past two weeks drove the yield on the benchmark 10-year Treasury note, which helps set borrowing costs on everything from corporate debt to mortgages, to above 1.5%, its highest level since the pandemic began and up from 0.7% in October.

….

Traders said concerning dynamics were evident in a Treasury auction late last week. Demand for five- and seven-year Treasurys was weak Thursday heading into a $62 billion auction of seven-year notes and nearly evaporated in the minutes following the auction, which was one of the most poorly received that analysts could remember.

The seven-year note was sold at a 1.195% yield, or 0.043 percentage point higher than traders had expected — a record gap for a seven-year note auction, according to Jefferies LLC analysts. Primary dealers, large financial firms that can trade directly with the Fed and are required to bid at auctions, were left with about 40% of the new notes, about twice the recent average.

Author(s): Julia-Ambra Verlaine, Sam Goldfarb

Publication Date: 28 February 2021

Publication Site: Wall Street Journal

Prelude to a State Pension Bailout

Mary Pat Campbell

Link: https://www.wsj.com/articles/prelude-to-a-state-pension-bailout-11614547953

Excerpt:

Ordinarily, insolvency means pension freezes and benefit reductions, but multiemployer pensions are run by labor unions, a key Democratic constituency. And so the House Covid bill plans to dole out an estimated $86 billion from 2022 to 2024 to 186 pensions, enabling these plans to pay full benefits through 2051. With no incentive to cut costs, there’s little reason to think the pensions will be solvent after 2051. Look forward to more spending down the road.

Bailout supporters argue they’re helping impoverished workers make ends meet, but that doesn’t add up. The average monthly benefit from a plan like Central States is a seemingly modest $1,400. But that average is skewed downward by large numbers of employees who retired after only a few years of service. The one-third of Central States retirees who receive more than $2,000 a month — plus Social Security benefits — make a bailout expensive. No one in this group is even close to being in poverty.

….

The larger worry is that Congressional Democrats’ willingness to bail out private-sector multiemployer pensions signals they would do the same for state and local employee plans. Public-employee pensions operate under the same loose funding rules as multiemployer pensions, and public plans in Illinois, Kentucky, New Jersey, Texas and other states are no better funded than the worst multiemployer plans.

Author(s): Andrew Biggs

Publication Date: 28 February 2021

Publication Site: Wall Street Journal

Opinion: Pension plans — and the people they support — are in danger

Mary Pat Campbell

Link: https://www.washingtonpost.com/opinions/letters-to-the-editor/pension-plans–and-the-people-they-support–are-in-danger/2021/02/28/3b1282fe-777c-11eb-9489-8f7dacd51e75_story.html

Excerpt:

Contrary to the Feb. 18 editorial “Congress needs to focus its covid relief bill — on covid relief,” multiemployer pension plans have faced significant additional challenges caused by the ongoing global pandemic. It has jeopardized these plans’ ability to deliver hard-earned benefits to more than 1 million enrolled retirees and workers and must be addressed by lawmakers now. The shutdown of the U.S. economy has greatly amplified the financial struggle of these plans. Hundreds of employers are facing bankruptcy and cannot contribute to multiemployer pension funds; employees have lost their jobs; and the sharp drop in interest rates hit plans hard. Senior citizens and essential workers are disproportionately impacted by both the effects of the coronavirus and the multiemployer pension crisis.

As the United States looks to reopen and rebuild, maintaining the solvency of the multiemployer pension system will be key to economic recovery. The National Institute on Retirement Security concluded that the $44.2 billion in private pension benefit payments paid to retirees of multiemployer plans in 2018 supported $96.6 billion in overall economic output in the national economy and an estimated $14.7 billion in total tax revenue. The country can ill-afford a reduction in these revenue streams during the recovery period.

Author(s): James Hoffa

Publication Date: 28 February 2021

Publication Site: Washington Post

Private Equity Pays To Silence Investor-Whistleblowers Aware Of Fraud

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2021/02/28/private-equity-pays-to-silence-investor-whistleblowers-aware-of-fraud/?sh=45191ea71cee

Excerpt:

For fiduciaries overseeing other people’s money, private equity’s disparate treatment of investors, abusive industry practices and alarming lack of transparency should be deal-breakers. To the contrary, pensions in recent years have dramatically increased their allocations to private equity funds—either because they don’t understand the dangers lurking in the shadows or simply don’t care as long as above-market returns are promised (which will supposedly reduce severe pension underfunding).

….

Securities and pension regulators have paid little attention to the “side letter” agreements private equity funds enter into with investors granting preferential treatment. It’s no secret that these agreements exist—the practice of entering into them is disclosed in offering memoranda and is openly discussed throughout the industry. As a result of increasing institutional investor domination of private equity, and the regulation applicable to these investors, it is now standard practice in the industry for each investor to demand its own side letter. As a consequence, there has been a proliferation of the number of side letters being negotiated with investors, as well as the kinds of arrangements and provisions included in them.

Author(s): Edward Siedle

Publication Date: 28 February 2021

Publication Site: Forbes

California’s Pension Woes Are Made Worse By Moving Emergency Services In House

Mary Pat Campbell

Link: https://www.forbes.com/sites/ikebrannon/2021/02/28/californias-pension-woes-are-made-worse-by-moving-emergency-services-in-house/?sh=40f419203629

Excerpt:

However, there is no significant budgetary reform in the offing, and California’s cities and counties feel no compunction to address the issue. In fact, these days several municipalities are taking steps that will ultimately serve to exacerbate the shortfall by bringing in all of their emergency services “in house,” rather than contracting out emergency services to a private entity. 

The rationale typically given for such steps is that doing ambulance and fire services completely in house helps coordinate emergency responses and creates efficiencies, improving services and saving them money. 

However, such efforts rarely manage to help towns—or the state, for that matter—to save money. Contracting out ambulance services is typically done by smaller communities that don’t have the demand to support a full-time ambulance crew, which can be expensive—a tricked-out ambulance alone costs over $150,000. Combining with another nearby community generates economies of scale. 

Author(s): Ike Brannon

Publication Date: 28 February 2021

Publication Site: Forbes