Pensionacolypse: The Prologue

Recently I was watching videos from The Money GPS and from @joshsigurdson about how underfunded pension funds were and how some are gonna be flat broke by 2020. All my life I've been thought to work somewhere that has a really good pension fund that pays really great benefits. Since I've left high school and started understanding about how pension funds work, I learned quickly that government pension funds were designed to be a scam. Listening to David Knight from Infowars, he stated that the reason the social security age was set to 65 was because that was the life expectancy. They never expected to have to pay out anyone. But I always thought as a principaled libertarian that the reason the government pension plans will quickly go broke is because they only invest in government bonds that yield a negative real rate. Actually as it stands right now, in the United States only the 10-year and 30-year bonds yield above the 2% inflation target that the central banks insist we are under. In Canada, the same is true for the 20-year and the 30-year bonds. I thought corperate pension funds were safer because it's the free market controlling the fund, it's managed by professional investors who know how to get as much yield for as little risk as possible. So when I watched these videos I was shocked and it made me curious.

I recently found my canadian bank annual reports from my grade 12 accounting project and some other corporate annual reports and what I found skocked me. I surveyed six corporations, CIBC, BMO, and RBC in fiscal year 2014, TD Canada Trust in fiscal year 2015, and Scotiabank and Algonquin Power in Fiscal Year 2016. Starting with RBC, their defined pension plans combined were 3.85% underfunded in 2014 which was an increase from 1.43% underfunded in 2013. CIBC's defined pension plans was 0.91% overfunded in 2014 which is a decrease from 5.35% overfunded in 2013. BMO's defined pension plan was 0.43% overfunded in 2014 which is a decrease from 1.39% overfunded in 2013. Those three seem alright. Two of three were slightly overfunded as at October 31, 2014, but notice how they all become less overfunded or more underfunded. But, save the worst for last. TD's defined benefit obligation was 0.93% underfunded in 2015 which actually improved from 9.70% underfunded in 2014 and 3.71% underfunded in 2013. Scotiabank's defined pension obligation was 14.98% underfunded in 2016, which has increased from 6.14% underfunded in 2015 and 7.85% underfunded in 2014. Finally Alquonquin Power and Utilities Corp.'s pension fund was 28.79% underfunded in 2016 which is actually a decrease from 34.60% underfunded in 2015. Their 2017 Q1 report shows that their underfunded status was down to 24.74% underfunded, which is better but still scary.

The reason I mention this preliminary data is because I'm announcing the launch of my newest weekly article series that will be posted between 7:30 pm and 8:30 pm ET every monday starting August 28, 2017 called Pensionacolyse. In this series I'll be investigating the pension funds of S&P 500 companies, so you can see the numbers in plain and clear english and understand how bad (or if we are lucky, how good) these corporate pension funds really are and why the numbers or so terrible (or good). I think everyone should be able to enjoy a good retirement. I think it's time we understand the problem with the pension funds and start saving for our own retirements without the help of our corporate/governmental overlords.