A Pension Jackpot for Wall Street

[unhappycamper]

http://www.opednews.com/articles/A-Pension-Jackpot-for-Wall-by-David-Sirota-Employees_Pensions_Politicians_Poor-140928-529.html



A Pension Jackpot for Wall Street
By David Sirota
OpEdNews Op Eds 9/28/2014 at 17:58:06

Most consumers understand that when you pay an above-market premium, you shouldn't expect to get a below-average product. Why, then, is this principle often ignored when it comes to managing billions of dollars in public pension systems?

This is one of the most significant questions facing states and cities as they struggle to meet their contractual obligations to public employees. In recent years, public officials have shifted more of those workers' pension money into private equity, hedge funds, venture capital and other so-called "alternative investments." In all, the National Association of State Retirement Administrators reports that roughly a quarter of all pension funds are now in these "alternative investments" -- a tripling in just 12 years.

Those investments are managed by private financial firms, which charge special fees that pension systems do not pay when they invest in stock index funds and bonds. The idea is that paying those fees -- which can cost hundreds of millions of dollars a year -- will be worth it, because the alternative investments will supposedly deliver higher returns than low-fee stock index funds like the S&P 500.

Unfortunately, while these alternative investments have delivered a fee jackpot to Wall Street firms, they have often delivered poor returns, meaning the public is paying a premium for a subpar product.

[Gidney N Cloyd]

1. Wall Street = Jackals and parasites.

They have a value but they shouldn't be running the ecosystem.

[daleanime]

2. K&R....

Privatize the profits, socialize the losses.