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 Don’t Gamble with Retiree Pensions
by Tom Campbell
June 5, 2008
Who should invest pension and other surplus state funds? State statutes currently give the sole authority for these investments to the State Treasurer, but a bill introduced in the House would strip this constitutionally elected officer of this authority and give it to the board of the Teachers and State Employees Retirement System. This is a poorly conceived idea for many reasons, none the least of which involves political influence.
This proposed legislation was most certainly prompted by a feud between SEANC, the State Employees Association of North Carolina and the incumbent State Treasurer. The group claimed the Treasurer was not forthcoming in giving them timely and accurate information regarding investments and investment results. The courts will resolve the lawsuit filed by SEANC, but a reasonable person would conclude that politics played some role in this feud. State employees enthusiastically supported and worked for the Treasurer’s opponent in the gubernatorial primary.
SEANC underscores why this is such a bad proposal. Because of their dislike of the Treasurer, the board of this organization did all in their power to influence a statewide election. Is it inconceivable that this same group might do the same in trying to sway investment decisions for retiree funds?
The reasons why the Treasurer was initially given sole authority over investments continue to be valid. The Treasurer is the one person who can be held accountable if poor investment decisions are made or if returns are unacceptable. The axiom about committees being groups where everyone is responsible and no one is accountable is too true. We desire more accountability, not less.
It is absurd to believe that the board of the Teachers and State Employees would have the financial expertise to make wise investment decisions. They would need massive amounts of help and you can be sure there are plenty waiting in the wings to offer that help. Unfortunately, most of those wanting to help are motivated by personal financial gain. Investing 76 billion dollars is an awesome responsibility, especially when you are doing so for thousands of retired and currently working employees. This is no place for the amateur hour or for undue political influence, either in getting appointed to the board or in making investments.
Having served under former Treasurer Harlan Boyles I have more than a general understanding of the task, the responsibility, and the accountability involved in investing this much money. I agree completely that this is a huge responsibility to place on the shoulders of one person. Perhaps there is a better way, but no one has come forward with one that minimizes political influence, ensures investment expertise, provides that decisions can be made in a timely and cost efficient manner, and holds one or more persons directly accountable for risk and return on investments.
Let’s not fix something which no one has demonstrated is broken. The Treasurer’s 8 percent return last year was nothing to sneeze at, earning our public pension funds a ranking of second best in the nation. The proposed legislation would gamble with our public employees’ retirements and should be quickly and surely defeated.
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