Pension insurer shifted to stocks

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Concern increases as losses mount; Failing plans could overwhelm agencyThe Boston Globe, boston.com
By Michael Kranish Globe Staff / March 30, 2009

WASHINGTON – Just months before the start of last year’s stock market collapse, the federal agency that insures the retirement funds of 44 million Americans departed from its conservative investment strategy and decided to put much of its $64 billion insurance fund into stocks.

…Charles E.F. Millard, the former agency director who implemented the strategy until the Bush administration departed on Jan. 20, dismissed such concerns. Millard, a former managing director of Lehman Brothers, said flatly that “the new investment policy is not riskier than the old one.”

Currently, the agency owes more in pension obligations than it has in funds, with an $11 billion shortfall as of last Sept. 30. Moreover, the agency might soon be responsible for many more pension plans.

In the early years of the George W. Bush presidency, the agency took a conservative investment approach under director Bradley N. Belt, who favored putting only between 15 and 25 percent of the fund into stocks.

Under Millard’s strategy, the pension agency was directed to invest 55 percent of its funds in stocks and real estate. That included 20 percent in US stocks, 19 percent in foreign stocks, 6 percent in what the agency’s records term “emerging market” stocks, 5 percent in private real estate and 5 percent in private equity firms.

The agency’s board – which consists of the secretaries of Treasury, Labor, and Commerce – approved the new investment strategy in a meeting in February 2008. But the board members have had only a limited role in the agency’s operation, meeting only 20 times over the 28 years before 2008. Read entire article at LINK

aura writes; Wall Street cleans out Main Street. How much longer do you think they’ll be able to rob the American people blind and get away with it?

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