Baby Boomer Waves Continue Through Pension Funds

I read. A lot. And one trend in economics that comes up over and over is the impact on the baby boomer generation in American society as well as the global economy. This is tough because you typically study the past to find patterns to predict the future. Well, baby boomers are unprecedented so lessons drawn are frequently one-time case studies. Case in point.

The number of companies with pensions has dropped. So I find it interesting that while companies are going bankrupt due to over zealous pension commitments and defaulting over to the tax payer, that on the other hand pension funds are being utilized for private equity buy outs. Like the private equity buyout of Chrysler by Cerberus. From the NYT article.

Private equity’s seemingly unstoppable wave has been fed in large part by the
pension funds of unionized workers. Big pension funds of public employees like
Calpers are among the biggest institutional investors in private equity firms,
and public pension money accounted for about a quarter of all new money raised
by private equity last year, according to the publication Private Equity
Analyst.

So if I am understanding this correctly, pension funds are being used to take public companies private and possibly reduce pension benefits. There is some irony in there I suspect. I also suspect that we don’t fully understand what is going on behind the scenes. I hope the Pension Review Board does.

The financial terms of the Daimler sale of Chrysler to Cerberus are here.