Ted Siedle: The Greatest Retirement Crisis In The History Of The World

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"We are on the precipice of the greatest retirement crisis in the history of the world. And that makes perfect sense because, first of all, we have the largest elderly population in the history of the world.

Just focusing on the United States: our elderly are woefully unprepared to retire. And in the decades to come we will witness millions of elderly American's, Baby Boomers and others, slipping into poverty. 'Too frail to work, too poor to retire' will become the new normal for many elderly Americans."

So warns pension fraud whistleblower Ted Siedle.

Siedle's firm, Benchmark Financial Services, Inc. has pioneered over $1 trillion in forensic investigations of the money management industry. He's nationally recognized as an authority on pensions and investment management matters, having testified before the Senate Banking Committee regarding fund scandals and is an expert in various Madoff-related and other litigations.

In 2017, he secured the largest SEC whistleblower award in history of $48 million, and in 2018, the largest CFTC award in history at $30 million.

Siedel rings a loud warning bell regarding the solvency of today's public pension system. Specifically, his investigations show that most of them:

  • Are much too under-funded to meet their future payout obligations (e.g., Kentucky's state pension plan is only 12% funded)
  • Are experiencing annual returns far below the required 7% average the plans assume in their forecasts
  • Have oversight boards making portfolio allocation decisions that are staffed by individuals with zero experience managing financial securities (e.g., policemen, kindergarten teachers)
  • Have little transparency. Many are rarely audited. And many have moved their capital off-shore without accounting for where it's been moved to.
  • Are heavily influenced by politics when making portfolio allocations. Pet projects, such as sports stadiums, get funded to disastrous results while making local politically-connected 'friends of the pension board' rich
  • Are paying much higher fees to Wall Street than they used to, whose advisors are putting them into riskier and poorer-performing vehicles (e.g. hedge funds) in a desperate reach for yield

Siedel's Top 10 Reasons Why Stealing From State And Local Public Pensions Is The Perfect Crime is reading certain to give nightmares to anyone depending on a public pension, or worried about being forced to bail out failed funds by paying higher taxes in the future:

I think there will be bailouts. The alternative is chaos, disaster, Armageddon. I mean, it's like when people say we should cut Social Security benefits. Well, the majority of people that get Social Security live on nothing but Social Security. If you cut Social Security benefits people will die. People will get sick. People will not be able to get healthcare. Elderly people will be thrown out of their homes, their apartments, whatever

Wall Street will say "We've got a solution!" They'll offer pension obligation bonds, whatever. The solution Wall Street offers always is: Pay us more fees. Pay us to underwrite bonds. There will be many "solutions" offered. Taxing property owners is always popular as well.

Click the play button below to listen to Chris' interview with Ted Siedle (58m:11s).

Other Ways To Listen: iTunes | Google Play | SoundCloud | Stitcher | YouTube | Download |

This is a companion discussion topic for the original entry at https://peakprosperity.com/ted-siedle-the-greatest-retirement-crisis-in-the-history-of-the-world/

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It dosen’t take some one with a lot of brains to know that the pensions are a mess. This is easy ,but the hard part is knowing the details,and the devel is in the details.When the pensions go bad in one state every other state is going jump on the band wagon. Now all hell is going to break loose.

 

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Definitely let us know when his book is out. Look forward to listening to the follow up interview you plan on.
 

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Prior to this I thought that the pension problem was mostly casued by promising the unions too lavish benefits defended by impossible actuarial assumptions such as 8% return without recessions etc. I never imagined that the so called advisors could pull more than 3% of fees from the fund nor that the funds would be invested in practically useless infrastructure projects such as stadiums. While I appreciate Ted’s call to become active and obtain information, I truly feel that this is one of those ships that has already sailed a long time ago, the ship is actually probably already on fire and in the process of sinkign to boot. Not sure if there’s any point to attend to the problems of such a ship. I just feel lucky that my corporate 401k is invested in the most conservative bond fund available to me (don’t tell me, I know, they too have many, many problems).
 

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Which now stands for Seniors Desperate Survival. Maybe that’s why Dr Guy McPherson’s predicament theory seems so reassuring. Nobody is going to get out alive later so live your life as if tomorrow ain’t there.
Meanwhile, I don’t recall if Chris or Adam have interiewed this fellow? http://survivalacres.com/blog/zero-sum-survival-part-i/
Elder Preppers Unite!
The Seniors United Can Never Be Defeated!
Ho Ho, Ho Shit, Man!
Let My Pea Plants Go!
 

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Finally, someone said that cutting off social security will cause seniors to starve.
We’ve been hearing for years that baby boomers have no retirement savings and that social security will become insolvent. 2 plus 2.
Many baby boomers paid into social security all of their lives. Perhaps some of them would have had savings, if they werent forced to fund an earlier generations retirement? Perhaps not.
Social security is not an entitlement for people who have paid into it all of their lives.
It can be revoked, but if so, be honest about the theaft.
 

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Stabu wrote:
Prior to this I thought that the pension problem was mostly casued by promising the unions too lavish benefits defended by impossible actuarial assumptions such as 8% return without recessions etc. I never imagined that the so called advisors could pull more than 3% of fees from the fund nor that the funds would be invested in practically useless infrastructure projects such as stadiums. While I appreciate Ted's call to become active and obtain information, I truly feel that this is one of those ships that has already sailed a long time ago, the ship is actually probably already on fire and in the process of sinkign to boot. Not sure if there's any point to attend to the problems of such a ship. I just feel lucky that my corporate 401k is invested in the most conservative bond fund available to me (don't tell me, I know, they too have many, many problems).
I thought I understood how bad things were. Ted made me realize it's much worse than that. Really...there's $1.3 trillion of pension money parked offshore in unaudited, opaque accounts? Here's my thought, that money is already gone. It's been reduced to fantasy digits on statements that CalPers, et al., have but that's about it. Maybe, with luck, there will be a decade long, protracted battle to pry back $0.13 on the dollar, before legal fees. The idea that Wall Street gets to merrily predate on the hapless and uninformed ordinary people doing their best in a game heavily stacked againast them is both sad and wearying. But by all means let's cheer on the ""market"" rescues that are now a daily feature because a rising stock ""market"" must mean that America is doing great!! Right? Here's a free tip for all the journalists that can't seem to connect the dots; a country that kills its children by making insulin unafordable, prints up billionaires by handing them free central bank money, and kills its seniors by legally stealing their retirement money is not a civilization. Not by any measure of that word. It's a horror show.

 

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cmartenson wrote:
Here's a free tip for all the journalists that can't seem to connect the dots; a country that kills its children by making insulin unafordable, prints up billionaires by handing them free central bank money, and kills its seniors by legally stealing their retirement money is not a civilization. Not by any measure of that word. It's a horror show.

Chris, that was by far one of the most poignant, all-encompassing, hard-hitting comments I’ve ever read from you…and you are often a cornucopia treasure trove of great comments.

When this failed experiment called civilization collapses, I won’t weep for it, even if I may weep for the lives crushed in the collapse.
 

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It’s also a whore show
 

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I’ve been investment officer for both public and private funds.
Although there is a lot to unpack from this interview I’ll start by stating that if whistleblowers in really important matters were paid millions instead of being confined to embassies and jail we might not even have to worry about this pension stuff…
The most important thing to remember and it has been revealed here at PP many times is that infinite growth on a finite planet is not possible. The “foundation” of any pension plan is growth and we are now at a point where the only sane solution is degrowth. Pensions are an anachronism and will not work in a shrinking resource environment. Period.
Siedle is mistaken that public plans have less oversight than private. ERISA has not been effective in the underfunding of private pensions.
I have found that there is little difference between public boards and private boards. The two public plans that I was involved with had well-meaning – for the most part – lay boards but they really did not call the shots. The consultants and advisory boards – and staff for that matter – had the ability to nix dumb ideas.
It was not unusual for public investment officers to make the shift to the private realm. The one exception for me was the Washington State Investment Board. My replacement in 1996 is still there as are at least 3 senior investment staff members that were there when I was there. It is not a meritocracy. In 2017, they all made $316,000-$317,000 annually. Only to be eclipsed on the state payroll by professors and coaches. Bread and circuses and political correctness rule! By contrast, many of my peers at the Alaska fund made the shift to private. It could be that Olympia is more hospitable than Juneau. Because I made a big stink about excessive fees I was not a candidate to make the move to the private sector.
Here is how it works… When I was at the Washington State Investment Board, Barry Sternlicht and Jay Sugarman came to our real estate staff of three to make a pitch for a mezzanine fund (a type of fund where the originators can make a buttload of money while pension plans can do all right if things go right.) The point was made that Sugarman was representing the Pritzker family. While staff was impressed with the pitch, our outside real estate consultant did not like the track record of Sternlicht. He had been involved with the development of Canary Wharf (London) and although it went on to be successful, it was not performing in the mid-90’s. She was able to nix our decision to invest.
The bottom line is that the world is controlled by a group – you can figure out who they are – similar to those mentioned in the above paragraph and for whatever reason they have yet to admit that infinite growth on a finite planet is not possible.
 

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I still tend to think that the horror show may be EXACTLY what civilization is.
Which is why Snydeman won’t weep for it.
Am I wrong?
Please convince me otherwise.
 

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LesPhelps wrote:
Finally, someone said that cutting off social security will cause seniors to starve. We’ve been hearing for years that baby boomers have no retirement savings and that social security will become insolvent. 2 plus 2. Many baby boomers paid into social security all of their lives. Perhaps some of them would have had savings, if they werent forced to fund an earlier generations retirement? Perhaps not. Social security is not an entitlement for people who have paid into it all of their lives. It can be revoked, but if so, be honest about the theaft.
Les, I agree with your sentiment; however, you need to realize SS is just a Ponzi scheme in its purest form. "Benefits" to one group are supplied by taxes on another group. We were the tax serfs for preceeding generations. As long as there is an ever increasing base from which to tax, the scheme appears to work. Unfortunately, the ever increasing tax base results from a greater population and/or greater "productivity." Improvements from productivity come mostly from increased mechanization that require additional energy inputs. The very solution will cause additional problems down the road. All Ponzi schemes are doomed to failure and SS isn't an exception. Politicians aren't as concerned with fixing the problem as they are with kicking the can down the road so they can get reelected. After all, if they don't get reelected, they can't possibly solve the problem. Due to the enormous costs involved with campaigning, they need to focus on building a war chest for the next election as soon as they get (re)elected. The easiest way is to curry donations by crafting loopholes in the laws the rest of us have to live with. Most of us consider that to be corruption. What are they to do when everyone else in their position does the same thing? Perhaps that is why the Millennials are embracing socialism. They know that the system isn't working for them. College has become extraordinarily expensive. Once they graduate, the jobs most can get are too low waged to pay off the loans, buy an overinflated house, raise a family, and have enough left over to actually enjoy their time off. So, we declare them to be slackers because they still live in mom & dad's basement. What would you do if you were born a couple of generations later? I expect widespread chaos when the system finally topples. It won't just be a single component that goes haywire. When the government has to admit it can't keep promises made generations ago, it will affect everyone everywhere. Even those who had the foresight to prepare for this eventuality will be targets for the desperate masses. Do you think that pension promises will actually be honored when everything else fails? So, what will Boomers do when their government promises get reneged? You can bet that they'll be bitching at the top of their lungs ... at first. If The Fourth Turning (T4T) predictions are correct, Boomers will eventually realize that their situation has changed. The new normal won't get "fixed." There won't be other options, so they'll embrace austerity and start bragging about how little they need to survive. The main reason will be to help their precious Millennials who were coddled in youth (participation trophies ???) I feel sorriest for the Gen-Xers. The rug will get pulled out from under them just before they receive any benefits for "contributing" taxes their entire working lives to this failed system. If congress is predictable, congress will ask them to contribute even more while modest cuts to beneficiaries will be implemented and additional borrowing will balloon the debt - until it suddenly is deemed too big by bond buyers. Bond yields increasing rapidly will be the canary that signals the imminent end. We're all to blame for the impending failure. We weren't vigilant enough (and still aren't) when politicians sing the sweet siren song. We really, really want to believe them when they paint their pretty word pictures. My advice: Trust math, not politicians. Grover  
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“Rwanda times Yugoslavia”
 

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cmartenson wrote:
a country that kills its children by making insulin unafordable
While it's true that pharma companies overcharge for medications due to monopoly or duopoly pricing and it's condemnable, the insulin part of that story isn't entirely true. It is true that ultra-short acting insulins like Humalog and Novolog are unafordable, but short acting insulins like Regular (brand names Humulin and Novolin) are very cheap and only costs $24.88 at Walmart per vial and one vial lasts at least a month for practically any Type 1 diabetic (hard to say about Obese Type 2s because of insulin resistance and stupid amounts of food that some of them can consume). The reason why Endos prescribe Humalog/Novolog is because it acts faster and that fast action is necessary if the person in question eats a lot of fast acting carbs like pasta, sugary soda, bread (including whole grain), cakes, rice, potatoes, french fries etc. so items that are commonly part of the Standard American Diet or SAD for short. But if you eat non-startchy vegetables, protein foods (e.g. meat) or fat, the regular insulin is way better and to boot you don't even need a prescription for it! The dietitians and endos in general btw. recommend a high carbohydrate diet for type 1 diabetics, which is kind of like recommending a diet high in peanuts to someone with a peanut allergy.  
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Tons of stories out there like these:

Americans are dying because they can’t afford insulin Living with Type 1 Diabetes When You Can’t Afford Insulin
Jun 22, 2017 - Some doctors are uncomfortable discussing costs with patients; many patients are embarrassed to admit they can't afford medication, and ...
Dec 4, 2018 - Study finds 1 in 4 patients can't afford insulin. Results highlight urgent need to address affordability. It's widely known at this point that patients ...
Dec 9, 2018 - People who need insulin for their type 1 or type 2 diabetes are skimping ... said they skipped required doses because they could not afford the medication. .... Between buying food and medicine paying bills I can't hardly afford ...
Seems to be a problem for many people... ...but it sounds like their problem could be, in some (many?) cases bad information from the MD, a SAD diet that's otherwise controllable, or both.  
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…But I always knew that. Thats why I never paid much into social security, and I havent contributed a dime in over ten years. The natural world is a competition for resources. As those resources get scarcer, the competition gets more vicious. Those who have their hands on the control levers are going to take advantage of those that dont. Its a jungle. Things like trustworthy institutions, governments, banks, and communities are relics from another time when there was so much growth and resources available to everyone that people could afford to be that way.
In the new world, he who is most self sufficient and strong will get hurt the least. Those who put their trust in others outside of their own family and close friends will die with knives in their backs [ and even some will get it from their own ]. As time goes on it’s going to get more intense as the facade of civilization falls away completely. You should have a good portion of your wealth close to hand under your own protection already, and be poised to pull the rest out from those “institutions” before they take it all.

 

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Superbugs to kill ‘more than cancer’ by 2050
https://www.bbc.com/news/health-30416844
 

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The pension issue is definitely worse for different reasons than I thought.
Just like Siedle said, I was focused on the outflow - lavish pension grants to individuals who are gaming the pension system. I didn’t focus on the fees, which is where the real money vanishes.
Long ago there was the Teamsters pension fund, which Jimmy Hoffa was found guilty of having looted. For $25 million. It seems as though Wall Street was informed by that event - that there was a lot of money to be looted, and also, how to execute the looting in a strictly legal manner.
https://www.nytimes.com/1964/07/27/archives/hoffa-convicted-on-use-of-funds-faces-20-years-he-and-6-others-are.html
“little people” corruption is annoying, but it is the systemic corruption where the real looting takes place. I just have to keep remembering that. 3% per year in “fees” - after 10 years of that, you’re talking about real money.

 

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People need to see your anger and emotions Chris. I have always found that for change to happen we have to ding people’s hearts first. Empathy and understanding are needed before they can be moved to a place of action.
Keep the gloves off and keep swinging. There is not much else left that we can do!
Jan
 

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Grover wrote:
Les, I agree with your sentiment; however, you need to realize SS is just a Ponzi scheme in its purest form. So, what will Boomers do when their government promises get reneged? You can bet that they'll be bitching at the top of their lungs ... at first. If The Fourth Turning (T4T) predictions are correct, Boomers will eventually realize that their situation has changed. The new normal won't get "fixed." There won't be other options, so they'll embrace austerity and start bragging about how little they need to survive. Grover
I'm going to have to disagree with you on this Grover. A Ponzi scheme is perpetrated on volunteer participants. When it's forced on an entire country, it's name is changed to Socalism. "The problem with Socialism is that eventually you run out of other peoples money." - Margaret Thatcher Just don't call something I've been forced to pay for all my life an entitlement. It isn't. And, when you decide not to meet your obligations, call it theft or something honest. A very few baby boomers will squeek by on austerity, but many won't. Look around you. There are baby boomers just getting by on the payments they receive. I will probably be able to cover necessities and putting food on the table. I may, toward the end of my lifespan, struggle paying taxes and health care costs. Les