{"id":541960,"date":"2010-04-23T11:33:00","date_gmt":"2010-04-23T15:33:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/goldman-sachs-european-pensions-2010-4"},"modified":"2010-04-23T11:33:00","modified_gmt":"2010-04-23T15:33:00","slug":"its-not-just-european-governments-that-have-massive-pension-problems-companies-are-getting-hammered-too","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/541960","title":{"rendered":"It’s Not Just European GOVERNMENTS That Have Massive Pension Problems–Companies Are Getting Hammered, Too"},"content":{"rendered":"

\"GS<\/p>\n

Right now, talk of a European debt crisis is centering on the potential of Greek default.  Investors are also worried about whether IMF-EU assistance will be enough to save the struggling nation, and whether the crisis will spread to the rest of the PIIGS.<\/p>\n

But debt isn’t just a problem for European governments.  The private sector is suffering through a large amount of off-balance sheet debts due to pension problems, and it’s causing growth and market-value problems for some of Europe’s biggest industries.<\/p>\n

(Need we mention that we have the same problem here?).<\/p>\n

Here are the highlights of an excellent presentation on the European debt problem from Goldman Sachs.<\/p>\n

Pension solvency is a serious issue for even the best companies in Europe<\/h2>\n
\"Pension<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

Returns have gone up, and pension contributions have declined as a result.<\/h2>\n
\"Returns<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

But firms still have a tremendous amount of liabilities (pension and other).<\/h2>\n
\"But<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

In bad times for the market, pensions have far higher expenses, because companies have to cover the gap created by the falling assets.<\/h2>\n
\"In<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

Greece is unsurprisingly in a bad place. But so are Austria, Italy, Spain, Belgium, and others<\/h2>\n
\"Greece<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

Auto companies are in difficult shape, but real estate remains strong.<\/h2>\n
\"Auto<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

The larger a company’s pension obligations are, the lower its PE is<\/h2>\n
\"The<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

Low solvency is seen as the worst pension attribute, with equity allocation not far behind.<\/h2>\n
\"Low<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

Companies with large pension obligations get hit more in a bear market because asset prices typically decline.<\/h2>\n
\"Companies<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

Pensions are still choosing to stay away from equities…which means they’ve missed a lot of the recent rally<\/h2>\n
\"Pensions<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

Having more equities does not make your pension fund under perform.<\/h2>\n
\"Having<\/div>\n

Source: Goldman Sachs<\/em><\/p>\n

<\/p>\n

But private companies in Europe are still doing better than governments. Check out the awful state of European public debt.<\/h2>\n
\"But<\/div>\n

See the European debt crisis with your own eyes ><\/a><\/h2>\n

Join the conversation about this story »<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Right now, talk of a European debt crisis is centering on the potential of Greek default.  Investors are also worried about whether IMF-EU assistance will be enough to save the struggling nation, and whether the crisis will spread to the rest of the PIIGS. But debt isn’t just a problem for European governments.  The private […]<\/p>\n","protected":false},"author":1977,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-541960","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/541960","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1977"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=541960"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/541960\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=541960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=541960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=541960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}