[quote=Leorocky]pension issues are almost entirely caused by 2 things:
underfunding – actual decision’s by politicians to use the money elsewhere
one sided “bargaining” by unions with pols they donated money to and got elected – think pension spiking, credits for uniform allowances, cities purchasing or outright granting time or benefits to people, double dipping etc
the article made it very clear that pensions investing in hedge funds and PE was a relatively new phenomenon. Wall St has not taken over any pension funds. Again, managers make descisions to invest ins tocks, bonds etc. I’m not sure what “market distortions” are.[/quote]
The pension funds are fairly new in the hedge fund and other “alternative investments” world, but still over a decade deep. But they have been moving toward riskier and riskier investments for many decades. Again, they used to invest almost exclusively in Treasuries, with a very small allocation toward other high-grade bonds. Wall Street (and their insiders) has lobbied over the decades to have these pension funds invest in equities…first the “safer” types, and gradually into riskier equities and then, “alternative investments.”
The “market distortions” comment refers to the booms, busts, and bubbles caused by Wall Street speculation and the Fed’s manipulation of interest rates (causing asset price bubbles in riskier asset classes).
And not sure what you mean by this: “think pension spiking, credits for uniform allowances, cities purchasing or outright granting time or benefits to people, double dipping etc.”
The pension spiking, “PERSable” income, and “double-dipping” (DROP program) were ALL addressed with Brown’s pension reforms. Also, not sure what you mean by “cities purchasing or outright granting time,” but if you’re referring to purchasable service credit (where the EMPLOYEE, not the employer, could purchase time creditable to PERS — at a very high cost to offset costs to the pension fund), that was also addressed in Brown’s pension reform.
See? Reform CAN happen, and it can be done in a methodical, legal, ETHICAL, and rational way.
