Can Harrisburg insiders really find better ways to invest Pa. pension billions?
The law, Act 5 of 2017, doesn't close the multi-billion-dollar gap between what the state has promised retired public workers, and what they've set aside to pay those pensions, which will have to be paid by the commonwealth eventually.
It does stop the growth in that gap, which had depressed the state's credit rating and forced taxpayers to pay millions extra in annual borrowing costs. It also slows the relentless annual cost increases that add more than
The law cut future obligations by ending the state's guarantee to pay retired staff pretty close to what some of them made when they were working. Starting this month, new hires will get smaller guaranteed pensions, plus additional private-sector-style retirement plans whose values rise and fall with
Lawmakers in
But lawmakers disagreed on whether the
A) Models of sophisticated private investing, as their chairmen, executives, annual reports, consultants, and industry associations assure us; or
B) Bumblers, whose political boards hire friendly vendors, hide what their private contractors actually collect, and present investment performance in an overly rosy light, while racking up persistent deficits. They do all this while failing to stop the corruption of public officials, such as the two recent
So last year's law set up a five-member, all-male
Who will do all this? State Rep.
I ran this list by my own panel of experts. The limited information the commission published on members "certainly doesn't suggest any great qualifications,"
The commission's "omissions are glaring," noted
"The main qualification [appears to be] the ability to play the
For his part, chairman Tobash, a property and casualty insurance salesman, has been a leader of the pension reformers in his party; he tells me he's sure they can find the billions in savings, and promised to "dive deeper" in realistically comparing
Bloom told me the panel is a challenge: It's so small that no more than two members can converse at a time without calling a public meeting. He's all for better fee disclosure: Even PSERS, which unlike
The commission has named a consultant,
In a 2016 interview with Chief Investment Officer (CIO) magazine, Monk described American public pension investors, as a group, as mediocre. He said their high-fee private-equity profits were juiced by "cheap debt" -- in markets that were already "pointing upward" -- enriching private managers so they can buy pro ball teams and go "laughing all the way to the bank."
Speaking to the Pensions & Investments newspaper last month, he said the
As I recall,
But Monk doesn't see public pension overseers as over-aggressive. "The consultants, service providers, and non-expert board members were a toxic mix of status quo bias," he told CIO. Looks like the commission will be challenging that status quo, at least.
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