Letter to Editor

Posted by By at 14 March, at 11 : 44 AM Print

With so much of the focus these days on closing State deficits by cutting the salaries, funding and benefits of public-employees why isn’t anyone looking at the overall cost of the pensions and trying to find others ways to reduce costs?

Case in point – During the whole public uprising in Wisconsin some numbers came out that got me interested.  The Wisconsin State Employee Pension is actually on pretty sound ground based on funding levels with $79 Billion in assets.  It could close shop and continue to fully fund benefits for over 30 years.  But what is fascinating is when you look at the other side of the balance sheet and see what it costs to manage the assets.  The Wisconsin plan is a great plan to look at with 50% of the assets managed by state employees and 50% of the assets managed by outside fund managers – Wall Street Firms. In 2009-10 the Wisconsin pension plan paid out $225 Million in total management fees.  The portion managed by state employees cost $28 Million and the portion managed by outside firms cost $197 Million.

Further analysis revealed the following “Costs” associated with asset management fees on various State Employee Pension Plans:

State

Plan Assets

Internal Costs

External Costs

Wisconsin

$ 79 B $28 M

(On Assets of $39.5 B)

$ 197 M

(On Assets of $39.5 B)

Pennsylvania (PSERS)

$ 45 B $7 M

(On Assets of $14 B)

$509 M

(On Assets of $31 B)

Pennsylvania (SERS)

$ 28 B 0.00

$ 266 M

(On Assets of $31 B)

New Jersey

$ 70 B 0.00

$ 125 M

(On Assets of $70 B)

CalPERS (CA)

$ 220 B 0.00

$ 929 M

(On Assets of $220 B)

CSTRS (CA)

$ 146 B 0.00

$617 M

(On Assets of $146 B)

How is this not part of the conversation?

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