The Wall St Journal writes: For pension funds, it is the worst of times, and the worst of times. Stocks are getting pummeled as the prospect of a global slowdown increases. The S&P 500 is now down more than 10% year-to-date. Meanwhile, already superlow bond yields are getting even lower, thanks to the Federal Reserve's latest extraordinary easing action. The 30-year U.S. Treasury bond at one point on Thursday yielded less than 2.8%.
That is the kind of one-two punch that will worsen pension deficits while also making the contributions required to fill holes even bigger. This could crimp earnings and cash flow at some publicly traded companies while putting already strained state and local-government plans under even greater pressure. In turn, this could be another weight on markets and add to further economic uncertainty.
And, if nothing else, the market's current malaise again highlights the lunacy of both public and private pension funds continuing to believe on average that they can generate annual returns of 8%....
Find out more at http://online.wsj.com/article/SB10001424053111903703604576586983549170492.html?mod=WSJ_Heard_LEFTTopNews
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