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In Case You Missed It: Raimondo’s Pension Investments

Saturday, April 27, 2013


Pension decisions made by General Treasurer Gina Raimondo were the focus of several major GoLocalProv stories this week and stimulated considerable engagement and conversation among readers from throughout Rhode Island. 

GoLocal's investigation into the performance of the state's pension fund yielded the following findings: The state pension fund lost more than $200 million in fiscal year 2012 as the state moved into hedge funds and other alternative investments under General Treasurer Gina Raimondo, raising questions about the investment strategy she has pursued and the viability of the pension reforms she has orchestrated.

The assets in the state pension fund dropped from $7.488 billion in June 2011 to $7.284 billion a year later, a decrease of $204 million, according to the independent annual audit. Overall, the fund had a positive rate of return of 1.55 percent during the same period. But the fund still lost money because the benefits paid out wiped out the modest gains for the year and exceeded the amount of new contributions to the fund from workers and the state.

Read the entire story, here.

Later in the week, GoLocal followed up on a state Investment Commission meeting with criticism from former head of the Rhode Island American Federation of Teachers Marcia Reback. Reback told GoLocalprov that she has continued to call into question the commission's current hedge fund strategy -- and as well as its fiduciary and social responsibilities.

"I voted for [hedge funds] initially because they were sold to us as not being volatile. What I want to know is, is the lack of volatility worth the investment management fees we're paying? I'd like to know our overall fee structure as it compares to what we paid four years ago....I was told they would have to get back to me on that," said Reback.

Read more about Reback's concerns, and a response from Commission board member Andrew K. Reilly, here.


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"But the fund still lost money because the benefits paid out wiped out the modest gains for the year and exceeded the amount of new contributions to the fund from workers and the state."

Isn't there an important element missing here? Like how much was paid out in fees for these hedge funds and other alternative investments that the treasurer has been championing?

Comment #1 by William Berube on 2013 04 27

Paying out benefits ro those who paid into the fund is what the Pension fund is for. Law makers like to use it to bail out the mistakes they make.

Comment #2 by Eloise O'Shea-Wyatt on 2013 04 27

Gina is a nightmare. Time for Mollis or Caprio to fix the Treasurer's office.

Comment #3 by Thomas Ryan on 2013 04 27

You guys just DON'T GET IT. The fund actually made money in terms of the investment. It had a 1.55% rate of return. The $200M that was lost is a result of state employee contracts the REQUIRE high payouts, beyond the funds rate of return. It is not due to the relatively minor cost of the 0.5% management fees paid to hedge fund managers, and those hedge funds are just 15% of the total pension fund. Sorry, you folks are nearly financially illiterate. Talk to a banker or someone who can set you straight. The rate of return for 2013 is going to be something like 10%. That is great! What are you babies crying about?? The equities market has up years and down years. If you want NO down years or low years, then tell the Treasurer you want the money in cash under a mattress earning 0%. That will only make your pension fall apart faster. Don't you follow that???

Comment #4 by Katy Sloop on 2013 04 27

This just in.......Gina paid 50 million in fees.....The next highest year......13 million......All that money for a dismal return? Katy, that is what we are crying about! And guess what? I get it. But apparently you don't. P.S. My wife's 401K returned 10.7% after fees during the exact same period. I am going to ask her financial planner to run for Treasurer!

Comment #5 by Stephen DeNinno on 2013 04 28

Katy -

Give my regards to the loudmouth gavones at Enron.

Are you kidding, one point something percent? You're OK with that piffling return?

Any the rest of us would find another investment adviser were they to tell us that was the best they could do. You could do better at the casinos. For that matter, as some here have noted, you could do better with a dart-throwing orangutang or even a gibbon.

Either the investment management is horribly incompetent or there's multiple ledgers here.

Mr. Berube -

Have enjoyed very much reading your astute comments posted both here and at Ted Siedle's Forbes articles. Little one can add to them as you've said much, all of which with my family and I agree wholeheartedly.

Thank you for speaking truth to gutless mendacity. On another note, the Ed DiPrete railroad job, though I'm not overly familiar with the intricacies, set off my instincts and just plain stunk to high Heaven.

Comment #6 by paul zecchino on 2013 04 29

Mr. DeNinno -

Absolutely agree. Many investors are enjoying high single and low double digit returns, and this supposedly educated Treasurer with a straight face tells the citizens she clearly holds in low regard that one percent is the best she can do?

The arrogance of these Enron thugs offends me. Arrogance always makes one stupid.

One thing I've learned, it's always best to underestimate oneself and overestimate those who callously dismiss the citizens they're sworn to serve.

"One thing I've learned: move calmly, move cautiously, you'll never be sorry."
- Joel Weinstock, "French Connection", c. 1971

Comment #7 by paul zecchino on 2013 04 29

Mr. Zecchino - Thank you for those kind words sir. I've read what you have had to say about the pension situation, and I only wish I were able to express myself as eloquently as you have. The world seems to have flipped upside down lately. The people that are willing to, and often do, give their all for their family and communities are now the villians. I just don't get it!

Comment #8 by William Berube on 2013 04 29

I concur William. It is no doubt the work of the 3rd and 4th richest Americans, the koch brothers and A.L.E.C. They had to take the heat off the oil industry and Wall St. So they devised a plan to shift the blame on the people that protect us, teach us, and maintain us. I can never figure out, when taxes go up a couple of hundred dollars, there are citizens in the street with pitchforks. But when the cost of energy, food, gasoline go up double, well that's free enterprise. I will never forget, as a young fire fighter, delivering food baskets to old retired police and fire fighters. They were living in the worst neighborhoods, rat infested tenements, making $150 a month. I could not believe that these were the men that protected Providence in the past. We swore NEVER AGAIN.

Comment #9 by Stephen DeNinno on 2013 04 29

Very sad, they deserved a lot better than that. I just wanted to say that you guys are the best. Prisons tend to catch fire quite often, so I've seen quite a few firemen in action up close. You're the only public safety workers that I've ever witnessed besides corrections officers that will walk with us through hundreds of inmates and make it look like a stroll in the park. I couldn't be more impressed by your professionalism... real class acts.

Comment #10 by William Berube on 2013 04 30

Right back at you William, my only dealing with prison types were in the providence court house. I was the captain of E-7, and when the crap finally hit the fan for the defendants, and they were going to the ACI, they would get chest pains, fake seizures. I don't know how you dealt with the likes of those people. But for all you did, they will take it all away.

Comment #11 by Stephen DeNinno on 2013 04 30

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