Think Your Pension Is Safe? Think Again!

This is a syndicated repost courtesy of The Daily Reckoning. To view original, click here. Reposted with permission.
Pension funds take money set aside for retirement and invest that money into safe securities. The goal is to grow that money so there is enough capital to pay retirees down the road.
These pensions must protect their capital, because losing money for their retirees would be disastrous. But they also must grow their investments. Otherwise, there won’t be enough money to pay employees when they retire.
In the past, these funds could buy safe investments like Treasury bonds or highly rated corporate bonds. The yields on these safe securities would help the pension funds grow their accounts just enough to be able to pay retirees.
But all of that changed since the Fed has lowered interest rates and kept them near zero for the better part of a decade. Yes, the Fed raised rates last month. But they’re still hovering just above zero.

This post was published at Wall Street Examiner by Zach Scheidt ‘ January 5, 2017.