Public Pension Funds Are Adding Risk to Raise Returns
States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers’ retirement.
Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds.
But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk.
“In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.”
Read it all.
Filed under: * Culture-Watch • Aging / the Elderly • * Economics, Politics • Economy • Corporations/Corporate Life • Labor/Labor Unions/Labor Market • Stock Market • The Credit Freeze Crisis of Fall 2008/The Recession of 2007-- • Politics in General • State Government
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Posted March 10, 2010 at 6:00 am
Posted March 10, 2010 at 6:00 am
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“Public Pension Funds Are Adding Risk to Raise Returns” and thus sowing the seeds of a future economic problem when the market does as markets do. Get rich quick schemes always punish the stupid. In this case the stupid includes these very smart professional investors.
March 10, 10:20 am | [comment link]