The World’s Floundering Pension Funds

pensionJapan’s Government Pension Investment Fund (GPIF) is the biggest pension fund in the world. At $1.3 trillion, it’s more than five times as large as Berkshire Hathaway Inc., Warren Buffett’s legendary company, which just happens to be fourth for revenue among Fortune 500 economies.
Obviously, millions of workers depend on GPIF for their retirement income. In 2014, in an attempt to fortify its assets, the fund decided to favor domestic and international stocks in its mix. It also decided to shed a good deal of its bond holdings. GPIF now owns over 5 percent of the domestic stock market. It is now the primary stockholder in Mitsubishi UFJ Financial Group and Honda. It is the second largest owner of shares in Toyota Motor.
The move to ignite GPIF is part of Prime Minister Shinzō Abe’s intense effort to jump start Japan’s economy which has been floundering for two decades. The initiative has officially been dubbed “Abenomics” by the world’s financial community. The key idea behind Abenomics has been to inject inflation into Japan’s economy.
Clearly, something had to be done. Japan is now faced with a dwindling overall population, and yet a rapidly increasing number of citizens over 65.
But, for all of its tweaking and reallocation of assets, GPIF posted a loss in excess of $50 billion in its last fiscal year. Tokyo stocks plummeted while the yen surged. The Nikkei stock average declined well over 10 percent in the last year. Meanwhile, the fund continues to pay out in benefits much more than it receives in contributions.
And lest you think this is simply a Japanese problem, think again. The California Public Employees’ Retirement System (Calpers), the U.S.’s largest pension fund, is now also faced with declining revenues.
While not yet as severe as Japan’s losses, the California fund Calpers adjusted its expectations after disclosing a gain of 0.6 percent in the fiscal year ended June 30, with after an anemic 2.4 percent return in fiscal 2015.
The troubled financial condition of GPIF and Calpers should serve as a cautionary tale for those of you concerned about protecting your retirement assets. While it may feel comfortable to have the backup of a pension fund and Social Security, the protection you’re likely to derive from these external (Government) sources is minimal. You have absolutely no control over the returns.
Why not consider fortifying your retirement portfolio with a hard asset – one that routinely thrives when paper assets decline? When you look around at the failures of the world’s pension funds, is it any wonder that professional investors flock to gold in a shaky economy. Isn’t it high time you hedged your own assets with an investment in physical gold?
For more information, call 800-777-6177 now, and ask to speak to a Fortress Gold Group representative.

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