Public Pensions for Sale - Type Investigations

Investigations

A Giant Pile of Money

Public pensions squander tens of billions of dollars each year on risky, poor-performing alternative investments like hedge funds.

Gary RivlinThe InterceptOctober 20, 2018

InvestigationBusiness, Politics

The Whistleblower

Kentucky’s willingness to gamble massively on high-risk alternative investments for its pensions has made the state an easy mark for Wall Street hucksters.

Gary RivlinThe InterceptOctober 21, 2018

InvestigationBusiness, Politics

The Private Equity Governor

Gov. Bruce Rauner made a fortune charging high fees to public pensions. Once elected, he tried to slash pension benefits.

Gary RivlinThe InterceptOctober 22, 2018

Key Findings

Public pensions in the United States manage $4 trillion in assets.
Public pensions across the country now squander tens of billions of dollars each year on hedge funds and other risky, often poor-performing alternative investments.
Pension pay-to-play scandals have swept up former Illinois Gov. Rod Blagojevich, former New York comptroller Alan Hevesi, and other political figures.
As Kentucky invested more heavily in high-fee alternatives, its performance lagged. Had Kentucky Retirement Systems’ investments kept pace with the median public pension fund from 2009 to 2014, it would have earned an additional $1.75 billion.
Meanwhile, its fees have gone up. In 2009, the year Kentucky Retirement System began investing in hedge funds, it paid $13.6 million in annual management fees. In 2014 that figure had increased to $126 million.
The governor of Illinois, Bruce Rauner, has been a leading champion of the idea that public pensions are in crisis, saying Illinois pensions were in an economic “death spiral.”
Yet public pensions have been very good to Rauner. He once estimated that pensions accounted for half to two-thirds of the money he and his partners had raised at their private equity firm, GTCR.

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