“What Are Other Funds Doing?”
I often hear this question at trustee board meetings. More often than not, it arises from a decision on funding or investment policy. When asked, it is expected that “the professionals” (i.e. attorney, actuary or consultant) will pull from a trove of information and divine “the answer.” The fact is, funding policy (dictated by the fund’s sponsor) and investment policy (as determined by the fund’s board) can be as varied as fingerprints.
A recent article in the Wall Street Journal notes the apparent conflict of public pension fund investments in private equity. The article points to the fact that certain labor unions, including the Service Employees International Union (SEIU), have criticized private equity funds while their members sit on boards which authorize investments in such funds. A specific example citied is the Ohio Public Employees Retirement System, which includes a representative of SEIU among its Board members, having increased its targeted private equity holdings. The article goes on to point out TV spots funded by the American Federation of State, County and Municipal Employees (AFSCME) which criticize Republican presidential candidate Mitt Romney regarding his tenure at Bain Consulting.
Public fund boards are increasingly under media pressure to disclose the identity and pension benefits of retirees. Historically, disclosure requests were confined to elected officials or other government employees with public profiles (e.g. university presidents, Division I-A football and basketball coaches.) Now, disclosure efforts are focused on “high end” pensioners – typically those with annual pensions above $100,000 per year – regardless of position or notoriety.
