The Pennsylvania Pension Mess
The biggest scam going in American financial life may be the collusive effort by Wall Street, the political class, and public sector unions to use union retirement money to prop up Wall Street speculation.
Looking for examples? Head to Pennsylvania:
The Pennsylvania State Employees’ Retirement System, for example, has more than 46 percent of its $26.3 billion in assets invested in riskier alternatives, including private equity funds and real estate. Over the last five years, the system paid roughly $1.35 billion in management fees – over 5 percent of the total value of the fund over a five-year period – while realizing an annualized return of just 3.6 percent, well below the 8 percent it needs to meet its financing requirements and also lagging behind the 4.9 percent median return for all public pension systems.
There’s bad news for Pennsylvania’s teachers, too:
The $51.4 billion Pennsylvania public schools pension system…which has 46 percent of its assets in alternatives, pays more than $500 million a year in fees. It has earned 3.9 percent annually since 2007.Ugh. Read it all