Monday, November 05, 2012


在台灣有很多博士級的流浪教師。碩士找不到工作。大學畢業的起薪比我二十幾年前大學畢業時差不了多少,然而物價和二十年前比起來高了不少。不斷的教育投資,所得到的結果是投資報酬率越來越低。我個人覺得,臺灣流行的 “文憑不重要” “學者誤國” “學校教的理論無用” “教授肥貓” “五年五百億浪費” 等等的言論,有一定的社會背景,並非一味的"反智"。如果清大畢業後較好的出路是到澳洲當屠夫,採礦,那麼說教育投資事一種浪費,並不過分。

問題在於經濟。長期的失業,或者所學非所用,造成教育投資的write off, or write down。個人的終生所得,因為留校時間長,造成可就業時間縮短而減少。學校和老師對學生就業並不關心。任其自生自滅。產業不斷移往工資更低的地方。如果學生"自力救濟",到澳洲打工,這是大人的錯,還是年輕人的錯?


Cover story of Time, Oct 29, 2012: "College is dead. Long Live college." talked about the situation in the US. For anyone who is interested.

Thursday, November 01, 2012

What is pension de-risking?

GM moonshot has completed. Other pension de-risking projects are on the rise. What is penison de-risking? In short it is to pay lump sum to participants so that the company no longer has the pension liability on their books.

What are the benefits to the companies?
  • Demographic trend is that people are living longer. This means companies are on the hook to pay annuity to pension participants longer. Paying lump sum today will release companies future surprise on their obligation to pay
  • The world is deleveraging. High government debt in US, Japan, and several big European countries means that austerity policies will be prevalent around the world. This points to slow economic growth and low interest rate. Low interest rate increases a company's pension liability. Slow economic growth diminishes a company's pension asset return. Many companies have taken the view that taking pension liabilities off their book is good for the company's financial future.
  • PBGC premium is rising due to high government debt and potentially higher risk of company failure due to the slow economic growth. De-risking reduces the premium to be paid.
How do participants take these company derisking effort? From the numbers I see majority of the participants take a lump sum. Less than 30% of the participants take annuity. I also hear some employees take this as a company betrayal to them, making their retirement less secure.

Is this trend spreading to public pension plans?

Anyway, DC is the trend of future retirement. DB is definitely dying. Everyone now has a stake in the financial market, be it stock or bonds, there is no escape. Succeesful investment becomes more and more important for everyone. Financial advisors are probably going to see strong demand for their services in the next decade.

"Guaranteed income is the top thing that people are looking for in their investments, and they'll take that over a rate of return. Going forward, annuities will become even more mainstream." --Cathy Weatherford, chief executive of the Insured Retirement Institute"