PBGC Claiming Westinghouse MTIA Worthless?

The reporter recently contacted me on this story:

WILMINGTON, Del. (Reuters) – Employees of U.S. nuclear power firm Westinghouse Electric Co LLC, which is bankrupt and reeling from a failed reactor project, got a nasty surprise recently: in the eyes of the U.S. government’s pension insurer, its retirement plan has a massive shortfall.

While bankrupt companies often have big pension deficits, the vast majority flag the underfunding years in advance of filing for Chapter 11. By contrast, the Westinghouse Electric Co Pension Plan, which has about 9,700 participants, appeared fully funded in its most recent report to the Department of Labor in 2015.

That was the question and this is what I found out (and did not find out):

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Breaking News: Western States Refiles

Last February the Western States Office and Professional Employees Pension Fund out of Portland, OR became the eleventh multiemployer (union) plan to file for benefit cuts under MPRA in an attempt to avoid insolvency. Last month that application was withdrawn. Yesterday it appeared as being refiled.

So what changed?

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Truth on NJ Fiscal State

Truth in Accounting released a report today on the Financial State of the States based on data provided by the states.

New Jersey came in last based on the numbers but we have two, if not entirely unique at least exaggerated, burdens to bear here that put us in a much worse fiscal position:

  1. A property-tax cap that exploded local debt: To keep gravy trains fueled after a 2% tax-cap was enacted in 2010 localities looked to repay campaign bribes with debt that is now sinking Atlantic City with other cities (Roselle) about to follow.
  2. Our politicians: Unlike Illinois and Connecticut where politicians are struggling to find solutions (however misguided) to their pension crises, in New Jersey we have a fairly reasonable way forward gathering dust and key positions in government staffed with assholes and miserable pricks (per opening arguments).

Though tragic on its own, this is not the whole story:

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What NJEA Bought

On Thursday I witnessed seven of eight Union County politicians, against the will of the majority and common sense, repaying their campaign donors.

Today nj.com focused on the cautionary tale of New Jersey Senate President Stephen Sweeney who crossed the teachers’ union and has wound up fighting against their money. In his defense (and including an astounding admission):

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Breaking News on NYS Teamsters Vote and MPRA Update

In checking the US Treasury’s MPRA website today we find that The Western State Office and Professional Employees Pension Fund withdrew their application on August 11 and the result of the New York State Teamsters Conference Pension Fund vote on suspending benefits was released. My prediction had been:

My guess, since there seems to be an effort to get ‘no’ votes, is 10,000 against, 5,000 for, and 20,000 not voting which means the benefit cuts get approved overwhelmingly, 25,000 to 10,000.

How close did I get?

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Hedging Bets

New Jersey’s next governor, Phil Murphy, in a facebook town hall had some thoughts on the state’s retirement system investing in hedge funds:

Without those inflated values that Alternative Investments get to make up the funded ratio of the New Jersey retirement system (by one measure the lowest of any state at 30.9%) would be even lower. And then there is the issue of what hedge funds are into. We got a peek this week.

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“Biggest Pension Event In My Lifetime”

My quote from a Reuters article on the voting by participants in the NYS Teamsters Pension Fund to accept benefit cuts:

The vote is “probably the biggest pension event in my lifetime,” said John Bury of Bury and Associates Inc of Union, New Jersey, who advises pension plans.

Here is the reasoning behind that statement.

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