The Oil Drum

_{"A lot of pension funds are gambling, they just don't know it at this point,'' said Jarislowsky, whose firm oversees C$64 billion in pension and endowment funds. ``When the thing goes poof, then they'll ask themselves: `How could I have been so stupid?'"}

Canadian Pension Funds Turn to LBOs as Yields on Bonds Diminish

Canada's three-largest pension fund managers, unable to meet the long-term needs of retirees with returns from stocks and bonds, plan to increase private-equity investments after spending about C$50 billion ($47 billion) buying companies, toll roads and gas pipelines.

Canada Pension Plan Investment Board and the Ontario Teachers' Pension Plan are leading rival groups that submitted bids this week to acquire BCE Inc., Canada's No. 1 telephone company, in what would be the country's largest takeover. Canada Pension, the country's second-biggest pension fund with C$117 billion of assets, also has offered to buy Auckland International Airport Ltd. shares, sparking a possible bidding contest for New Zealand's busiest airport.

The pension funds added C$31.7 billion to private equity holdings in their most recent fiscal year, almost double the amount of the previous 12 months. The retirement plans are buying riskier assets because they don't expect publicly traded securities to provide high enough returns to pay the more than C$1.56 trillion of benefits owed to retirees over the next 50 years, according to annual reports from the pension funds.

This will go awfully wrong. Gambling with other people's money, never a good idea. If you were born after 1960, you will never see a penny in pension money.