on Aug 14th, 2006California Pensions - Poor ROR = Off the Banker
Gambling involves a set of odds. How these odds get set in the casinos is regulated. Casino owners can’t just do as the please.
Pension fund managers are similar to casino owners these days. The managers of pension funds have made huge investments they hope will pay the house a decent return. The big difference, of course, is that pension fund managers do not control the rate of return like casino owners. Ask an investment banker about the odds of scoring on your pension investment, though, and you just might find that banker kicked to the curb.
David Crane is a gifted investment banker who shared his expertise with government until he was dumped from a state board that invests teacher retirement funds. Lawmakers bounced him from the board, one of the biggest players on Wall Street, after he repeatedly questioned whether state pension funds could earn enough to keep paying retirement benefits to teachers and other politically powerful employees.
Democratic legislators, who receive millions in campaign donations from teachers unions and other government labor groups, said it wasn’t Crane’s job to meddle in investment forecasts. California’s numbers are in line with those of other states, they note, and its pension investments have beat projections over the last 20 years.
Can California Win Its Pension Gamble?
The state’s retirement fund planners base their projections on higher market returns than some experts predict.
By Evan Halper, Times Staff Writer
August 14, 2006