Rise of 22% Intermediary Profiteers,
Long-Term Infrastructure Contracts Privatize Government Oversight
E. g. asset managers of pension assets give 2%+20% profits to selves and asset-manager shareholders; but institutional pension assets that were led to expect high returns only experience losses.
“In 2005, total global assets under management were $36.4 trillion…Active asset manager investments in direct holdings of real assets like housing and infrastructure also boomed. By 2021, assets under management ballooned to $108.6 trillion—around double the 10 largest national GDPs in the world combined”. [GDP: Gross Domestic Product]
BlackRock claims fiduciary duty only to shareholders; not to holders of B (non-voting) funds, nor to their pension funds.
E. g. Blackstone, Macquarie, & KKR asset managers make decades-long contracts for infrastructure (e. g. housing, energy, utilities, hospitals), collecting profits and cashing out without any maintenance after 3-5 years. Privatization and scamming of Americans and government occurs at all levels. “Their business model, unlike passive investing, rests on quick and ruthless extraction of profits from acquisitions they gobble up”.
Christophers, Brett, Our Lives in Their Portfolios: Why Asset Managers Own the World (Verso, 2023)
Laws against monopolies and financial scamming need to be enforced.
Defined Benefit pensions closed for new employees around 2005-2007, with the exception of unionized workers in both the public sector (federal, state and local government workers and teachers) and the private sector (e.g., autoworkers), as well as active-duty military members with at least 20 years of service.
Company and union retirement plans are voluntary. This means that employers are not required to provide a plan. However, once they set up a pension plan or a 401(k), 403(b) or other retirement savings plan, they are required to follow certain rules required by the federal private pension law, the Employee Retirement Security Act, called ERISA. The law generally prohibits retirement plan changes that affect the benefits you’ve already earned. Employers and plan trustees may decide to change their retirement plans by reducing the future level of benefits that you can earn, or they may freeze the plan for new employees, not allowing them to earn benefits under the plan. Currently, 14% of private sector workers have access to retirement plans compared to 60% in the past [1].
The option of keeping money in the bank is not useful because most banks did not increase their interest rates from 0.01% interest after Covid-19. The Federal Reserve is giving ~ 5% interest; but many workers have not invested money in T bills in the past and don’t have the courage to bid on an unknown percentage of interest. America needs a non-privatized banking institution that we can trust.
Defined Benefit (DB) pensions put the responsibility of choosing investments on experienced pension fund employees. If pension fund experts have trouble choosing and negotiating funds with adequate returns, most employees can’t do it for themselves.
Defined contribution (DC) plans, such as 401(k)s and IRAs generally put the burden of choosing investments on the employee. The lack of transparency for the bulk of funds makes it impossible for employees to make adequate choices for investments. Retirees on fixed incomes can’t afford to lose their principal and must take very low-interest conservative investments. As we’ve seen, retiree investments usually cannot earn enough to overcome inflation.
401 (k) defined contribution “best” DC plans put the burden of saving and investing on the employee. Plan managers of 401(k)s include ADP, Charles Schwab, ShareBuilder 401k, Fidelity Investments, T. Rowe Price, Merrill Edge, Employee Fiduciary, Vanguard, Empower, Betterment for Business. Of these, ADP, Charles Schwab, ShareBuilder 401k, Fidelity Investments, T. Rowe Price, Merrill Edge, Vanguard are publicly traded and mostly owned by monopoly cartel shareholders. Cartel companies charge very high fees (22% minimum, as annual fees). These 22% losses from pension funds are not mentioned to employee workers by the pension management companies. Employees have little choice where to invest their retirement funds. Employee Fiduciary, and Betterment for Business offer more choices but recommend the standard cartel investments; i. e. ETFs and index funds, Vanguard funds, Schwab funds.
None of them discuss fund %/year costs of fees. None discuss the very expensive 2 20 plan of funds (fees per year of 22-30% charged by funds as overhead). The pension managers are not the asset fund managers. They just provide access to the funds (i. e. high profits to asset managers and their investments that have exorbitant charges.)
The Securities and Exchange Commission (SEC) is charged with policing financial interactions. For example, “SEC Bars Hedge Fund Manager Charged with Asset Mismarking and Insider Trading” - was charged with falsely inflating assets in portfolios he managed. The SEC also barred him from the securities industry for “falsely inflating assets”. https://www.sec.gov/enforce/ia-5311-s
Result: The manager got three years' supervised release, a $7,311 fine, and criminal forfeiture of $6,611. This penalty is a trifle.
What about asset managers purloining 20+% per year of $100T pension funds per year over decades? What about misguiding pension funds to buy into being scammed long-term? Pension funds were paying 22-30% per year and getting consistent losses of value! Enforcement with $20M penalties is nothing to asset managers, gobbling up a million times more, $10T, in pension funds.
The stock market is not just a gamble, it is designed to funnel institutional (pension) assets to the most-wealthy shareholders, including to asset managers (who invest as shareholders of other monopoly cartel asset managers). Whenever the market is disrupted (often by choice / fraud), these transfers are accelerated. Over the same periods, consumer prices on essentials are highly inflated, causing the value of pension investments to plunge further.
Tabulated below is a partial list of shareholders of major companies. Highest shareholder percent ownership is held by BlackRock (BKRK), Vanguard, State Street, Fidelity, and Capital Group [Cap Gro]. A sum of percentages held by cartel cooperating monopolies, “% Cartel”, demonstrates that the cartel has huge power to influence policy decisions made by the companies.
Among the above companies, Northern Trust, Bank of America (Merrill is a B of A Co.), … are easily recognized as cartel monopoly members (more than 50% owned by the cartel) – which incidentally manage huge pension funds and are major shareholder investors in the financial cartel. Northern Trust managed The Aerospace Corporation’s pension fund, even after the pension fund was no longer viable (no longer offered to new employees).