I See a Pattern

While sovereign debt crises are the flavor of the month, and geopolitical shenanigans keep us amused, there is something just over the horizon that may mean potential retirees in the near future face 'forced austerity':

• Universities: http://pensionpulse.blogspot.com/2010/11/universities-sinking-in-pension-abyss.html
• Chicago (on a per capita basis): http://www.kellogg.northwestern.edu/news/rauh_chart.htm
• And from the same source...  all municipalities: 
• http://www.kellogg.northwestern.edu/News_Articles/2010/municipal-pension-systems.aspx#
• "Six major cities have current pension assets that can only pay for promised benefits through 2020: Philadelphia, Boston, Chicago, Cincinnati, Jacksonville and St. Paul. An additional 18 cities and counties, including New York City, Detroit, Cook County in Illinois and Orange County in California would be solvent through 2020 but not past 2025."
• Corporations too? 
• http://www.businessinsider.com/scary-facts-about-the-coming-pension-crisis-2010-8#americas-100-largest-corporate-pension-plans-were-underfunded-by-217-billion-at-the-end-of-2008-1
• "America's 100 largest corporate pension plans were underfunded by $217 billion at the end of 2008"
• "..under the Pension Reform Act of 2006, corporations were given a grace period until fiscal 2011 to fully fund their pensions--a time that is rapidly approaching...As the discount rate falls, the estimated present value of a fund's liabilities rises, along with any portion that is assumed to be unfunded.  The way the math works, a one percentage point decline in the discount rate a fund applies is equal to a roughly 15% decline in stock prices. As of today, the median discount (settlement) rate for corporate pension plans is 5.9%. That compares to a 3.7% discount rate applied to annuities, according to MetLife. That's a huge difference and one that must be recognized in the coming fiscal year, if rates stay low.
• http://www.forbes.com/2010/08/11/pension-fund-liability-personal-finance-corporate-profits.html