Next School Crisis for Chicago: Pension Fund Is Running Dry

One of the most vexing problems for Chicago and its teachers went virtually unmentioned during the strike: The pension fund is about to hit a wall. The Chicago Teachers’ Pension Fund has about $10 billion in assets, but is paying out more than $1 billion in benefits a year — much more than it has been taking in. That has forced it to sell investments, worth hundreds of millions of dollars a year, to pay retired teachers. Experts say the fund could collapse within a few years unless something is done.

“There’s a huge crisis,” said Laurence Msall, president of the Civic Federation, a nonpartisan research organization in Chicago that works on fiscal issues. “The problem does not get easier by waiting. The problem gets bigger, and starts to become an insurmountable obstacle.”

Teachers in Chicago, as in many cities, do not earn Social Security credit for their years in the classroom. Read more >>

European nations begin seizing private pensions

Hungary, Poland, and three other nations take over citizens' pension money to make up government budget shortfalls.

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations. As most pension schemes in Europe are organised by the state, European ministers of finance have a facilitated access to the savings accumulated there, and it is only logical that they try to get a hold of this money for their own ends. In recent weeks I have noted five such attempts: Three situations concern private personal savings; two others refer to national funds.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings. More...

Gold will revisit $1,000

"Even if demand stays the same, prices must go up," said Jason Toussaint, managing director of exchange traded gold. [See Video] "Investors are much more focused on wealth preservation than upside returns because they are much more focused on risk management within portfolios," Toussaint said. "We will see that continue. Demand for gold will also rise as pension funds, sovereign funds and other asset managers seek to preserve their wealth against inflation. Only 3pc to 5pc of assets at large institutions are allocated to gold, he said."