What follows below is a recent discussion from an article By Stephen Beale in GOlocal .co
For so long now, obfuscation and misleading information have been emanating from a well organized union effort to save defined pension plans in the public sector. To me its been obvious from the start that the unions are being well, you know ...unions. Unfortunately . to the uninformed or slightly informed this mildly clever organized effort to bash Gina Raimondo's pension reform act of 2011 has some merit. But their premise is wrong and chillingly naive. I believe that the more we allow two sided debate on this subject , then the more apparent it will become that deliberately false information has been proffered simply to influence a gullible and complicit media. Some of the medias conclusions have been just stupid . Others just part of their progressive agenda.
This is so unfortunate because this issue of Public Employee Guaranties is HUGE. Trillions of dollars have been diverted from average taxpayers by corrupt politicians and unions. The beneficiaries are the politicians who keep getting re elected , the public employees who receive outrageous guarantees and benefits and the union bosses who collect from the workers.
The loser ? you guessed it. Us. We the people. The other 89% of the population who are not public union employees. This compensation and the resultant bankruptcy of Cities and Towns across Rhode Island is unacceptable , un-American and just plain wrong. The cause of this disastrous predicament is the very corrupt Public Defined Benefit Schemes at local and state levels.Recently I saw an employee who had contributed roughly $60,000 total over her entire career to her own pension plan. She retired at age 47 and has already received $700,000 of the $1.8 million that unions say is guaranteed her. So let me ask you Mr. non-public employee or unemployed person.. How does your retirement look? How do you feel about the fact you guarantee her retirement with your tax dollars?
Back to Raimondo . The unions charge that Raimondo has hired hedge funds that have created unnecessary risk in the portfolio , hurt portfolio returns and enriched her wall street buds.Criticism lead by the spitting and abusive mudslinging of AFSCME hired gun Ted Siedle has been nonstop and laughable, but apparently effective because even a bright ,well meaning guy like Barry Schiller has been mislead.
It is my goal to shed light and analysis on pension funds , rectify the false accusations about them and subvert the massive union efforts to save a destructive compensation scheme that enriches 11% of our population at the expense of the other 89% of us.
below is today's commentary and analysis I did for Barry... this analysis refutes the ridiculous union and Siedle led notion that because the s&P 500 index returned more than nearly every pension fund in the US someone is cheating.... the whole article and all the attached commentary is on the link above and i recommend it
please contact me if you want to fight this corrupt practice and those who are lying about it
heres the clip:
barry schiller
My follow-ups:
On low fees, Mike R makes a good point its not a good idea to put all pension fund resources in stocks. But firms such as Vanguard have a wide selection of low cost diversified bond funds as well as real estate to balance a portfolio at low cost. I juat don't see why the public needs to pay 2%+ plus 20% of profits. The lead sentence on the post, if accurate, says fees of about $580,000 were paid on an investment of about $5 million. The time frame is not given but it shows the order of magnitude of the problem, if Vanguard's .14% were used on $5 million over 7 years that would total about $50,000 not $580,000.
On low fees, Mike R makes a good point its not a good idea to put all pension fund resources in stocks. But firms such as Vanguard have a wide selection of low cost diversified bond funds as well as real estate to balance a portfolio at low cost. I juat don't see why the public needs to pay 2%+ plus 20% of profits. The lead sentence on the post, if accurate, says fees of about $580,000 were paid on an investment of about $5 million. The time frame is not given but it shows the order of magnitude of the problem, if Vanguard's .14% were used on $5 million over 7 years that would total about $50,000 not $580,000.
Redd Ratt
Mike, I have to agree with Marcia Reback that $580,000 going to point Judith, while the state saw $965,000 is very expensive. Did Marcia Reback approve of this deal as a member of the commission?
michael riley
Excellent Barry
So at last we can have a real discussion and throw into the garbage head the ridiculous notion of comparing the return on our State Pension fund to the S&P 500 or some other stock index.Anyone who managed pension assets and put 100% into stocks would be sued and rightfully so.
So lets accept your premise that we get rid of all or most of the 75 outside managers of our fund. That's all of the following .. U.S.equities, us equity hedge fund,international equity, Private Equity, Venture Capital,Real Estate, Absolute return hedge funds, fixed Income, International fixed income ,hedge fund credit strategies. Instead we have 3 Vanguard Index Funds.
Normal weightings for a pension fund would be 60% stocks and 40% fixed income when speaking in the broad categories. For the following analysis I am going to say 65% stocks 35% fixed income. This will benefit your case as stocks have done well , bonds not so well. In stock weightings we will do a fairly normal 40% us stocks and 25% intl blend.
Barry's Portfolio
40% vanguard s&P 500 index return 15.82% fee .08
25% Vanguard Intl VTSGX return 12.9% fee .16
35% Vangauard aggregate return -1.95% fee .14
total weighted return = 8.87% fee= .121
Raimondo performance return= 11.07% fee= .90
Final analysis
Both the Barry portfolio and the Raimondo portfolio performances are after fee(no need to double count)
Barry return to Rhode Islanders 7.2 billion in assets * 8.87%
= $ 638,600,000
Raimondo return to rhode Islanders 7.2 billion in assets * 11.07%
= $ 797,000,000
Barry you cost us $ 158.4 million dollar or (797 mil- 638.6 mil)
you also took approximately 20% greater risk with your portfolio….
so if you ask me … Gina has a great risk adjusted return
I would be happy to analyze why Siedle ,afscme, Marcia Reback etal think saving $45 million to lose $160 million makes sense but I would need some psychiatrists to help analyze their thinking.
So at last we can have a real discussion and throw into the garbage head the ridiculous notion of comparing the return on our State Pension fund to the S&P 500 or some other stock index.Anyone who managed pension assets and put 100% into stocks would be sued and rightfully so.
So lets accept your premise that we get rid of all or most of the 75 outside managers of our fund. That's all of the following .. U.S.equities, us equity hedge fund,international equity, Private Equity, Venture Capital,Real Estate, Absolute return hedge funds, fixed Income, International fixed income ,hedge fund credit strategies. Instead we have 3 Vanguard Index Funds.
Normal weightings for a pension fund would be 60% stocks and 40% fixed income when speaking in the broad categories. For the following analysis I am going to say 65% stocks 35% fixed income. This will benefit your case as stocks have done well , bonds not so well. In stock weightings we will do a fairly normal 40% us stocks and 25% intl blend.
Barry's Portfolio
40% vanguard s&P 500 index return 15.82% fee .08
25% Vanguard Intl VTSGX return 12.9% fee .16
35% Vangauard aggregate return -1.95% fee .14
total weighted return = 8.87% fee= .121
Raimondo performance return= 11.07% fee= .90
Final analysis
Both the Barry portfolio and the Raimondo portfolio performances are after fee(no need to double count)
Barry return to Rhode Islanders 7.2 billion in assets * 8.87%
= $ 638,600,000
Raimondo return to rhode Islanders 7.2 billion in assets * 11.07%
= $ 797,000,000
Barry you cost us $ 158.4 million dollar or (797 mil- 638.6 mil)
you also took approximately 20% greater risk with your portfolio….
so if you ask me … Gina has a great risk adjusted return
I would be happy to analyze why Siedle ,afscme, Marcia Reback etal think saving $45 million to lose $160 million makes sense but I would need some psychiatrists to help analyze their thinking.
No comments:
Post a Comment