02/25/2008

Look Who's Buying Now!

Hello:

Last week, with minor press coverage,the Pension Benefit Guaranty Corporation (PBGC) the government agency that protects the retirement incomes of nearly 44 million American workers in 30,330  private-sector defined benefit pension plans, announced a new, less conservative, asset allocation strategy.

Under this new policy, the PBGC will allocate 45 percent of its assets to a diversified set of fixed-income investments, 45 percent to diversified equity investments and 10 percent to alternative investment classes. The agency’s previous policy set an equity investment target of 15–25 percent, although the actual level of equity investments was 28 percent at the end of FY 2007.

Wow! A usually conservative government agency is starting to buy. If they understand buy low/sell high, maybe other investors will start to buy low, too. 

By the way, PBGC is not funded by general tax revenues. PBGC collects insurance premiums from employers that sponsor insured pension plans, earns money from investments and receives funds from pension plans it takes over.

When you meet with your tax preparer this year, ask them if you might benefit from moving some of your traditional IRA into a Roth IRA. There are many regulations that govern the benefits of such a change, so do not be surprised if you tax preparer would prefer to give you an answer after April 15th. Why grow your investments tax-deferred, when you can grow them tax-free?

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager