Meet the $300 Billion Woman and the War on Our Pensions

[Just Means] The $300 billion woman is shedding her CEO title at the largest U.S. pension fund and adopting another monetary moniker: cheerleader for the “clean trillion.”

Anne Stausboll, who retires from CalPERS at the end of 2016, is urging global capital markets to remove barriers so the aggressive climate change goals agreed to by 175 global leaders in Paris can be achieved.

“The Paris agreement’s importance cannot be overstated. It’s unleashed an unprecedented opportunity for institutional investors worldwide – a powerful, global green light to shape tomorrows low-carbon economy,” said Stausboll, speaking at the annual Ceres conference in Boston. Stausboll is chairwoman of the sustainable investment advocacy organization’s board.

Dubbed the $300 billion woman for the value of CalPERS assets under management, Stausboll appears to be spending much of her remaining time at the pension fund advocating for mandatory reporting by companies on the topic of climate risk.

“To achieve the goals in the agreement, the world needs to invest at least $1 trillion a year in clean energy for several decades. That’s what we call the clean trillion,” Stausboll told the corporate and investment executives at Ceres. “We still need profound policy changes to unlock that capital.”

CalPERS recently invested in two large solar energy projects in southern California but remains concerned about 80 companies that contribute half of the greenhouse gas emissions of the 10,000 firms in the fund’s portfolio, Stausboll said. The fund is backing proxy campaigns aimed at spurring more climate risk reporting at three global mining companies and 12 U.S. energy producers, she added.

Beyond the proxy battles aimed at specific companies, Stausboll pointed to public policy challenges facing nations, states and local municipalities over carbon pricing, the elimination of fossil fuel subsidies and incentives for clean energy that must occur to achieve the COP21 objectives.

Corporate governance also plays a part in Stausboll’s agenda. Working with New York City funds, CalPERS is pushing for “climate competence” on corporate boards.

Explanation @zurichtimes;

This Londoner is talking now on the media because of the Disvestment pressure and changes related to Tobacco and Oil investments she is facing, but the real remark that should be noted related to the figure of 70% of investments.

Reuters reported in 2015;

On aggregate about 70 percent of the sector’s assets are invested in equities and other so-called risk assets, according to CEM Benchmarking.

We hope readers understood that short sentence and its implications for future pensioners?

This sum of $300 billion may seem like a large number, but consider that 70% of returns come from investment of this amount therefore 70% of it is at risk and only 30% of it is cash on hand for current obligations. 

When pension firms start talking restructuring and future “fiduciary” obligations readers should start to worry and wonder what is truly going on. Because Wall Street is den of thieves who love to divide the spoils amongst themselves and leave only change for the rest. We are exaggerating and engaging in fear mongering?

Consider the case of a pensioner in London who lost most of the investment in just “fees”. The Guardian reports;  In another case an investment was sold where, after five years, the saver was faced with an exit penalty of 99pc [%] of their fund. Trying to withdraw capital would, in effect, result in its complete loss. In another example investors paid commission of 7pc [%] to the salesman.

Now also consider the fact that HR 41 was passed in America in 2015 that clearly states the Federal Government WILL NOT be bailing out State pension funds and that has now in the law for nearly two years. Such legislation should make you wonder what the future of your pension truly are.

These are some of the most frightening words ever passed into law if you truly understand the implications;

Whereas several State and local pension plans are expected to fully exhaust their funds within ten years: Now, therefore, be it

Resolved, That it is the sense of the House of Representatives that—

(1) the Federal Government should not bailout State and local government employee pension plans and other post-employment benefit plans; and

(2) State and local governments should immediately institute reforms to their employee pension plans, including replacing defined benefit plans with defined contribution plans.

H.Res.41 – Expressing the sense of the House of Representatives that the Federal Government should not bail out State and local government employee pension plans or other plans that provide post-employment benefits to State and local government retirees. 114th Congress (2015-6)

https://www.congress.gov/bill/114th-congress/house-resolution/41/text

Future obligations are 70% dependent on investments and those investments turning out right. What happens when the market crashes or there is “market correction” and those returns and pension obligations cannot be met? 

Well what happens is similar to what is being done in Greece. Then pensioners will have to “negotiate” aka accept cuts in their pensions as it already happening in cases throughout Europe and North America.

Poul M. Thomsen is the Director of the IMF’s European Department writes on his blog;

No amount of pension reforms will make Greece’s debt sustainable without debt relief, and no amount of debt relief will make Greece’s pension system sustainable without pension reforms. Both need to come about. There is no doubt that both Greece and its European partners will face politically difficult decisions in the coming months to arrive at a program that is viable—one that adds up.

CNN reported back in 2014;

One Cleveland plan, for example, has said it would only need to cut current benefits by 10% in order to prevent insolvency, said Randy DeFrehn, executive director of a coalition of employers and labor unions that crafted the proposal the legislation is based on.

Without any cuts now, he said that plan expects to run out of money by 2028, at which point all participants would see their benefits cut by 50% or more.

The California Policy Center notes;

The example of Social Security provides several instructive points which should be considered in any discussions of pension reform, or the larger question of what the government’s role should be in providing financially sustainable retirement security to Americans. Social Security, unlike state/local government worker pensions, has a positive cash flow. As seen here from this table on their website “Fiscal Year Trust Fund Operations,” during 2013 Social Security collected $851 billion from active workers and paid out $813 billion, primarily to retirees. The so-called Social Security “Trust Fund” had a balance at the end of 2013 of $2.76 billion.

The Social Security is just $3 Billion away from being in a deficit, now if that is not a cause for worry we are not sure what will qualify as an alarm with modern day Americans.

When pensions are at risk then it is a symptomatic of a financial system that is essentially bankrupt and cannot meet future obligations and in the future be prepared for cuts to your pensions and other such “shocks” to the body and the psyche and the finances of all.

The Fat Lady is getting ready to sing soon.

Perhaps then it is appropriate that this dear gentle Lady from London will be retiring at the end of 2016. We are guessing that her “pension” will not be affected and is probably kept separate and safe from the “commoners pension”. Also consider what happens with the institutions set up to protect against fraud and insolvency are themselves bankrupt and technically insolvent since they to do not and never did have enough funds to cover all losses, but then again that is the basis of modern day western financial empires and transactions aka insurance.

Sources:

• https://thesustainableinvestor.net/2016/05/17/will-the-largest-public-pension-fund-in-the-u-s-have-a-tobacco-relapse/
• http://www.reuters.com/article/usa-pensions-risk-idUSL1N12K29P20151022
• http://money.cnn.com/2014/12/12/retirement/pension-cuts/
• http://www.justmeans.com/blog/clean-trillion-is-new-goal-for-300-billion-woman
• http://californiapolicycenter.org/estimating-americas-total-unfunded-state-and-local-government-pension-liability/
• https://www.gpo.gov/fdsys/pkg/BILLS-114hres41ih/pdf/BILLS-114hres41ih.pdf
• http://www.telegraph.co.uk/finance/personalfinance/investing/11726158/Exposed-the-rip-off-investment-advisers-who-cost-British-expats-billions.html
• https://blog-imfdirect.imf.org/2016/02/11/greece-toward-a-workable-program/
• https://www.youtube.com/watch?v=jUXL08iU73U
• https://www.youtube.com/watch?v=d8hKvK_nVMY
• https://www.congress.gov/bill/114th-congress/house-resolution/41/text