287 online
 
Most Popular Choices
Share on Facebook 55 Printer Friendly Page More Sharing
OpEdNews Op Eds    H2'ed 4/25/14

Wall Street's Outrageous Pension Swindle

By       (Page 1 of 1 pages)   3 comments

David Sirota
Message David Sirota
Become a Fan
  (10 fans)

(Image by Photo Credit: rawpixel/Shutterstock.com)   Details   DMCA
>
In the national debate over what to do about public pension shortfalls, here's something you may not know: The texts of the agreements signed between those pension funds and financial firms are almost always secret. Yes, that's right. Although they are public pensions that taxpayers contribute to and that public officials oversee, the exact terms of the financial deals being engineered in the public's name and with public money are typically not available to you, the taxpayer.
To understand why that should be cause for concern, ponder some possibilities as they relate to pension deals with hedge funds, private equity partnerships and other so-called "alternative investments." For example, it is possible that the secret terms of such agreements could allow other private individuals in the same investments to negotiate preferential terms for themselves, meaning public employees' pension money enriches those private investors. It is also possible that the secret terms of the agreements create the heads-Wall-Street-wins, tails-pensions-lose effect -- the one whereby retirees' money is subjected to huge risks, yet financial firms' profits are guaranteed regardless of returns.

North Carolina exemplifies the latter problem. In a new report for the union representing that state's public employees, former Securities and Exchange Commission investigator Ted Siedle documents how secrecy is allowing financial firms to bilk the Teachers' and State Employees' Retirement System, which is the seventh largest public pension fund in America.

The first part of Siedle's report evaluates the secrecy.

"Today, TSERS assets are directly invested in approximately 300 funds and indirectly in hundreds more underlying funds, the names, investment practices, portfolio holdings, investment performances, fees, expenses, regulation, trading and custodian banking arrangements of which are largely unknown to stakeholders, the State Auditor and, indeed, to even the (State) Treasurer and her staff," he reports. "As a result of the lack of transparency and accountability at TSERS, it is virtually impossible for stakeholders to know the answers to questions as fundamental as who is managing the money, what is it invested in and where is it?"

Before you claim this is just a minor problem, consider some numbers. According to Siedle's report, this huge pension system now is authorized to invest up to 35 percent -- or $30 billion -- of its assets in alternatives. Consider, too, that Siedle's report shows that with such a large allocation in these risky alternatives, the fund "has underperformed the average public plan by $6.8 billion."

So what is happening to retirees' money? 
read the rest here. 
Must Read 1   Supported 1   Valuable 1  
Rate It | View Ratings

David Sirota Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

David Sirota is a full-time political journalist, best-selling author and nationally syndicated newspaper columnist living in Denver, Colorado. He blogs for Working Assets and the Denver Post's PoliticsWest website. He is a Senior Editor at In These Times magazine, which in 2006 received the Utne Independent Press Award for political coverage. His 2006 book, Hostile Takeover, was a New York Times bestseller, and is now out in paperback. He has been a guest on, among others, CNN, MSNBC, CNBC and NPR. His writing, which draws on his (more...)
 

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

 
Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

STAY IN THE KNOW
If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
Name
Email
   (Opens new browser window)
 

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Tax the Corporations and the Rich or Take Draconian Cuts -- the Decision Is Ours

Bush Used the IRS, FBI, CIA and Secret Service to Go After Opponents -- Where Was the Fox and GOP Outrage?

GOP: Recession's Foreclosure Victims "Want a Homeless Life"

How the Trans-Pacific Partnership Gives Corporations Special Legal Rights

Busting myths that FDR prolonged Great Depression

To View Comments or Join the Conversation:

Tell A Friend