First, Obama appoints the catfood commission, then Ireland pledges its retirement funds to bolster the banksters, and now France joins the growing queue of nations serving up the fates of their older workers to private sector greed.
From George Coats of http://www.efinancialnews.com via the Wall Street Journal:
Asset managers will have the chance to get billions of euros in mandates in the next few months for the €36bn [($49 billion] Fonds de Réserve pour les Retraites (FRR), the French reserve pension fund, after the French parliament last week passed a law to use its assets to pay off the debts of France’s welfare system.
The assets have been transferred into the state’s social debt sinking fund Cades. The FRR will continue to control the assets, but as a third-party manager on behalf of Cades.
The change is included in the annual social security law that was adopted last week and will be published by the end of December after anticipated approval by the constitutional court.
The move reflects a willingness by governments to use long-term assets to fill short-term deficits, including Ireland’s announcement last week that it would use the country’s €24bn National Pensions Reserve Fund “to support the exchequer’s funding programme” and Hungary’s bid to claw $15bn of private pension funds back to the state system.
The decision has prompted a radical restructuring of the FRR’s investments. The new strategic investment plan, which will be released in the new year, will see a rapid reduction in its 40% allocation to equities and a shift to cash and short-term government bonds, according to a source close to the situation.
There will be a focus on liability-driven investment, where asset managers are told to minimise risk by matching assets closely to liabilities.
The transfer of the FRR’s assets to Cades is controversial. Force Ouvrière, a trade union confederation, accused the government of “provoking the clinical death” of the FRR.
The decision was taken within the context of this year’s pension reform, which provoked riots with its decision to raise the retirement age.
>snip<
Another source said: “In most years, the FRR accounts for more than 50% of asset management mandates in France.”
He said the FRR had been an innovative force in the relatively conservative French asset management world.
It had pioneered a shift in the style of managing money in France, from balanced mandates, where a single fund manager invested its client’s money in many different asset classes, to specialist mandates, involving many fund managers focusing on particular areas of expertise. The FRR promoted socially responsible investment, increased the use of investment consultants and encouraged objectivity in assessing performance.
The source added that without the FRR, “the risk is that the market will slip back into its old habits and slower pace”.
Moussequetaire, who forwarded the article to esnl, comments:
This is the first official recognition by the French government that Social Security funds have been pilfered, over decades.
Had it not been for years of subterfuge theft, Social Security would be fully solvent, today. In principle, and according to most accounts, it still is. But like the US, the French government recognizes that it has withdrawn more from SS funds than it can ever possibly return to it. Hence the bogus hysteria about the Social Security system being in ‘financial difficulty’.
All that cash, sitting around, like that. The thieves, deceivers and investors simply couldn’t help themselves.
eats shoots 'n leaves 