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Megan McArdle

Megan McArdle - Megan McArdle is a senior editor for The Atlantic who writes about business and economics. She has worked at three start-ups, a consulting firm, an investment bank, a disaster recovery firm at Ground Zero, and The Economist. She is currently on leave.
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Megan was born and raised on the Upper West Side of Manhattan, and yes, she does enjoy her lattes, as well as the occasional extra-dry skim-milk cappuccino. Her checkered work history includes three start-ups, four years as a technology project manager for a boutique consulting firm, a summer as an associate at an investment bank, and a year spent as sort of an executive copy girl for one of the disaster-recovery firms at Ground Zero � all before the age of 30.

While working at Ground Zero, Megan started Live From the WTC, a blog focused on economics, business, and cooking. She may or may not have been the first major economics blogger, depending on whether we are allowed to throw outlying variables such as Brad Delong out of the set. From there it was but a few steps down the slippery slope to freelance journalism. She has worked in various capacities for The Economist, where she wrote about economics and oversaw the founding of Free Exchange, the magazine's economics blog. She has also maintained her own blog, Asymmetrical Information, which moved to The Atlantic, along with its owner, in August 2007.

Megan holds a bachelor's degree in English literature from the University of Pennsylvania and an M.B.A. from the University of Chicago. After a lifetime as a New Yorker, she now resides in northwest Washington, D.C., where she is still trying to figure out what one does with an apartment larger than 400 square feet.

Anemic Pension Funds Still Hemorrhaging

By Megan McArdle
Oct 21 2011, 9:42 AM ET Comment

Here's a problem with traditional corporate pensions that I hadn't really thought about: in bad times, when the fund looks shaky, they may be vulnerable to something akin to a bank run:


That's the kind of uncertainty prompted American Airlines Captain Rod Carlone to leave the work force last month, much sooner than he had expected. Carlone says he did not want to risk missing out on a lump sum payment if the American Airlines Pensions Inc. Pilot Retirement Benefit Program Fixed Income Plan (the pilot pension plan) was underfunded. After almost 24 years at American, he flew his last flight on September 30 from Dallas to Los Angeles.

"I can't afford at almost 62 a financial setback I could not recover from," Carlone says. "I live in Las Vegas, and this is one wager I didn't want to make."

Concerns about the pension have resurfaced in recent months, but the airline says participants shouldn't worry. "We have a history of meeting our pension obligations," says Sean Collins, director of financial communications at American Airlines.

If people are concerned about the health of the pension, they may be more likely to retire early--or to take the lump sum, rather than the regular payments.  This forces the pension to liquidate assets just when prices are weakest, and further undermines the health of the plan.


And pension plans are not healthy right now.  They're getting hit by a double-whammy: tougher funding requirements, and a market that's not doing much.  As an institutional fund manager I recently spoke to told me, "correlations are too tight right now; all you can do is trade the spread."

There's not much to be done about this--I'd need some pretty powerful convincing before I'd argue in favor of relaxing pension funding regulations.  (Though anyone who wants to try is hereby invited to give it a shot).  And if politicians knew how to make the markets healthier, they'd have done it a long time ago.  Still, this is another vulnerability in a system that really didn't ned another vulnerability.


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