Heather Gillers

speaker

548 appearances 11 recordings 1 series first heard Nov 2018 last heard Oct 2021

Heather Gillers’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Pension Funds Suffer Record Losses in First Quarter · 12 May 2020 podcast

Another problem is that a lot of governments have used their pension fund kind of like a bank to borrow from when they have encountered other budget problems. matched

So governments are supposed to be making yearly contributions to their pension funds, but in places like Illinois, for example, one year when it's a little tight, instead of cutting spending, they've just decided not to make their full pension payment. matched

And that happened for a long time, year after year. matched

governments lost out on any investment returns they could have earned on that money. matched

So through a mix of underfunding, paying insufficient pension contributions, making over-optimistic investment return assumptions, and frankly, people are living longer, you have these very significant benefit obligations and not enough money to pay for them in the pension fund. matched

Because courts have protected benefits owed to current workers and retirees very rigorously, governments usually have three choices of how to address the shortfalls in their pension funding. matched

One is by earning a lot of money in the markets. matched

That didn't go very well last quarter. matched

Another is... matched

by putting more money into the pension funds, which is going to be really difficult for governments who are faced with all these other revenue losses as a result of the pandemic. matched

And the third way is cutting benefits for new workers who are not protected by courts. matched

And you saw that happen really across the country after the recession, the 2008 recession. matched

And that may happen again. matched

They're not as bad. matched

This quarter is the worst quarter on record, even worse than the worst quarter of 2008. matched

But in 2008, you had losses quarter after quarter. matched

And that just hammered pension funds. matched

And if that happens again, they will get hammered again. matched

So a lot depends. matched

You know, we've already seen the stock market improve a fair amount since the end of March. matched

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