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01-02-2013, 10:37 PM
  #30
Seedling
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Quote:
Originally Posted by knorthern knight View Post
I heard from a former co-work that an an acquaintance of his AND THE ACQUAINTANCE'S SON were both drawing pensions from Ford simultaneously. This gets even worse in the NHL's case, because I don't think players play for 30 years (yes, I know about Gordie Howe). So the qualification period is obviously a lot shorter.

The Fiscal Cliff, and QE (Quantitative Easing) combine to make safe investment returns ridiculously low. Defined benefits will one day be remembered as part of "the good ole days".
There is no doubt that the historic low rates for interest are really messing up a lot of pensions. Most have a governance formula that only allows for certain components in the portfolio to make sure the risk exposure stays at a pre-determined level. What this does is effectively mandates the choice a pension manager has in terms of options, and since most pensions are run very conservatively, the defined benefits are under pressure because there are usually more members drawing than contributing at this time. So you have a few choices. One is to raise the rates of all contributing parties to make up for lost performance. One is to assume more risk of the pooled capital in the fund, however this is not usually advised of even allowed depending on the pension laws that govern the fund as well as it's board of trustees input on the matter. The other is to transition to a defined contribution and perhaps look at the first option of members paying more to the old plan at the same time. None of the options are without their own risks.

Now, I think the fund management, as far a s I can tell from public documents, is run fairly well and with good oversight. I don't think either side would really want to fundamentally change that. The issue ,as I see it, is who is going to pay how much and since the PA has lost salary, they will definitely be asking for major increase from the owners side of HRR. That is potentially very costly for the owners as they already contribute 75% of the funds dollars. I cannot see them being eager to increase that especially when it has been rumoured that the PA wants that amount to not count towards HRR as a source of funding. The owners definitely would like it related to HRR as it reduces other HRR costs for them.

Essentially, I see this being down to the players asking the owners for say 90% ( speculation on my part) so the players can reduce their share to 10% and keep the other 15% as salary from HRR.

It SHOULD be a matter of back and forth number splitting. This should not be "the hill to die on" for either side, but still a worthwhile negotiation point.

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