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RI Pension Fund Underperformed Market by $800 Million in FY14

Thursday, July 24, 2014

 

Raimondo, who is running for Governor will need to explain the performance

Rhode Island's $8 billion pension fund posted a gain of 15.12% for Fiscal Year 2014, which Forbes columnist and SEC lawyer Edward Sieldle criticized for underperforming the market by 10% -- or "$800 million," said Siedle.  

"The market was up 25% over the period," said Siedle.  "The state's pension fund underperformed the market by 10% -- on $8 billion, that's $800 million.'

GoLocal's Stephen Beale wrote in 2013 that ERSRI saw a 11% return for that fiscal year, with a similar ten point lag behind the market return of 21% -- for a differential of $700M.  

"That's over a billion dollars of underperformance right there," Siedle told GoLocalProv.  "That right there could take care of the COLA."

Financial analyst and GoLocal MINDSETTER Michael Riley, however, thought the state's performance was a "very good return" -- but questioned its methods.  

"The allocation is just right, but the vehicles are wrong," said Riley.  "There are much cheaper alternatives to the hedge fund allocations .....no need to pay 2% and 20% fees."

Ted Siedle, Forbes contributor and did consulting work to one public union

Performance


Sieldle conducted an investigation into Rhode Island's pension fund last year, producing a report entitled, "License to Steal" in which he called for the SEC to investigate Rhode Island, saying, "The Treasurer has intentionally withheld information about soaring investment fees which is material in assessing both whether ERSRI should invest in costly alternative investments and whether benefit cuts are necessary to improve pension funding."

"Why did Rhode Island do so badly this year?  Hedge funds and private equity," said Siedle.  "If you look at the SIC report, private equity underperformed the market by 30%, and hedge funds did less than half of what the market did, at 12%."

"Raimondo's disclosing here $26 million in direct billing fees, but what about fund-to-fund fees?  In the past, she's disclosed fees of $70 million.  What we need to know are the total fees, direct and indirect, billed or not billed," said Siedle. 

The General Treasurer's office did not respond to the request for total fees for the past fiscal year, but did praise the ERSRI return.

"The State Investment Commission has been pursuing a strategy of achieving strong long-term returns while reducing risk, and results over the last three years show that strategy to be working," said Ashley Gingerella O'Shea, Communications Director for the General Treasurer.  "The investment return of 15.12% for Fiscal Year 2014 is double our target rate of return, and is an encouraging step forward as we continue to put the retirement system on a safe, secure path."

Around the Country


Nationally, California announced its retirement systems -- CalPERS and CalSTERS - were up over 18% for the year, as did Minnesota.  New Jersey's pension fund was up 16%.  

"The real question is how much of all these funds underperformed the traditional liquid markets," said Siedle. "The fact that all of these have gone down this disastrous path goes to show you the drag of the ' Wall Street wealth transfer'.  It's no excuse for Rhode Island, but they're all pursuing politically driven alternative investments."

"If anything, you can make an argument that this approach is too conservative," said Siedle.  "Raimondo herself said that private equity should be doing 300 basis points better than the traditional market -- and we see that it's not."
 

 

Related Slideshow: Top Providence Pensions

Prev Next

#49

Name- Daniel Guertin

Annual Earning- $95,050.92

Postition- Police-5

City- Providence   

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19,1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#48

Name- Carmine Vallante

Annual Earning- $95,140.20

Postition- Fire-4

City- Johnston

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19,1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#47

Name- Alfred Millard

Annual Earning- $95,368.32

Postition- Fire-4

City- Warwick

State- RI

Retirement Type- Accidental Disability

Retirement Date- March 24, 1994

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#46

Name- James Rattigan

Annual Earning- $95,983.44

Postition- Fire-4

City- North Providence   

State- RI

Retirement Type- Service

Retirement Date- June 30, 2003

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#45

Name- Frank Deangelis

Annual Earning- $95,986.80

Postition- Fire-4

City- North Providence   

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#44

Name- Stephen Lowe

Annual Earning- $96,156.36

Postition- Fire-4

City- Bristol   

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 17, 1992

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#43

Name- Mary Gonsalves

Annual Earning- $97,463.04

Postition- Police-5

City- Warwick

State- RI

Retirement Type- Beneficiary

Retirement Date- December 1, 1993

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#42

Name- William O'Neill

Annual Earning- $98,160.96

Postition- Fire-4

City- Cumberland   

State- RI

Retirement Type- Accidental Disability

Retirement Date- August 22, 1990

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#41

Name- Paul Healy

Annual Earning- $98,183.28

Postition- Fire-4

City- Cranston  

State- RI

Retirement Type- Service

Retirement Date- October 20, 1993

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#40

Name- James Molloy

Annual Earning- $98,711.16

Postition- Fire-4

City- Providence   

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 18, 1987

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#39

Name- Livia Miller

Annual Earning- $99,193.80

Postition- Fire-4

City- Warwick 

State- RI

Retirement Type- Beneficiary

Retirement Date- May 1, 1997

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#38

Name- Joseph Battista

Annual Earning- $99,271.08

Postition- Fire-4

City- Johnston

State- RI

Retirement Type- Accidental Disability

Retirement Date- April 29, 2004

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#37

Name- Robert Kerfoot

Annual Earning- $100,140.36

Postition- Fire-4

City- Cranston

State- RI

Retirement Type- Accidental Disability

Retirement Date- March 24, 1994

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#36

Name- Ralph Ricci

Annual Earning- $100,357.44

Postition- Fire-4

City- Providence

State- RI

Retirement Type- Accidental Disability

Retirement Date- April 28, 1994

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#35

Name- Henry Latek

Annual Earning- $100,502.52

Postition- Fire-4

City- Providence

State- RI

Retirement Type- Service

Retirement Date- June 30, 1995

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#34

Name- Joseph Bradley

Annual Earning- $100,898.52

Postition- Fire-4

City- Whitefield

State- NH

Retirement Type- Accidental Disability

Retirement Date- November 20, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#33

Name- Ronald Johnson

Annual Earning- $102,098.64

Postition- Fire-4

City- North Scituate

State- RI

Retirement Type- Accidental Disability

Retirement Date- May 1, 2003

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#32

Name- Gloria Pisaturo

Annual Earning- $103,385.76

Postition- Police-5

City- Warwick

State- RI

Retirement Type- Beneficiary

Retirement Date- December 1, 2002

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#31

Name- Edmond Malloy

Annual Earning- $103,575.72

Postition- Police-5

City- Chepachet

State- RI

Retirement Type- Accidental Disability

Retirement Date- September 5, 1990

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#30

Name- John Reposa

Annual Earning- $104,665.44

Postition- Fire-4

City- Jamestown

State- RI

Retirement Type- Accidental Disability

Retirement Date- June 21, 1995

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#29

Name- Pasquale Rocchio

Annual Earning- $105,238.32

Postition- Police-5

City- North Providence

State- RI

Retirement Type- Service

Retirement Date- August 22, 1989

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#28

Name- David Deignan

Annual Earning- $105,609.36

Postition- Police-5

City- Providence

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#27

Name- Lee Podedworny

Annual Earning- $106,838.16

Postition- Fire-4

City- South Kingstown

State- RI

Retirement Type- Accidental Disability

Retirement Date- July 23, 1992

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#26

Name- Nancy Donahue

Annual Earning- $107,757.24

Postition- Fire-4

City- Warwick

State- RI

Retirement Type- Beneficiary

Retirement Date- July 1, 2005

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#25

Name- Domenic Pono

Annual Earning- $107,850.72

Postition- Fire-4

City- Cranston

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#24

Name- John Murphy

Annual Earning- $107,892.84

Postition- Fire-4

City- Providence

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#23

Name- Robert Carlson

Annual Earning- $108,555.36

Postition- Fire-4

City- Greenville

State- RI

Retirement Type- Accidental Disability

Retirement Date- April 24, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#22

Name- Robert Emmett

Annual Earning- $109,256.16

Postition- Police-5

City- Cranston

State- RI

Retirement Type- Service

Retirement Date- November 13, 1990

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#21

Name- Thomas Doyle

Annual Earning- $109,329.24

Postition- Fire-4

City- West Warwick

State- RI

Retirement Type- Accidental Disability

Retirement Date- August 26, 1988

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#20

Name- Joseph Errico

Annual Earning- $109,611.60

Postition- Fire-4

City- Warwick

State- RI

Retirement Type- Service

Retirement Date- June 30, 1995

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#19

Name- Edward MacDonald

Annual Earning- $110,225.64

Postition- Fire-4

City- Johnston

State- RI

Retirement Type- Accidental Disability

Retirement Date- May 26, 1994

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#18

Name- Alfred Lamothe

Annual Earning- $110,505.96

Postition- Fire-4

City- Warwick

State- RI

Retirement Type- Accidental Disability

Retirement Date- September 6, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#17

Name- Ernest Silva

Annual Earning- $112,796.28

Postition- Fire-4

City- Ft. Myers

State- FL

Retirement Type- Accidental Disability

Retirement Date- April 24, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#16

Name- Edward Dolan

Annual Earning- $113,126.04

Postition- Fire-4

City- North Kingstown

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#15

Name- Paul Marianetti

Annual Earning- $113,331.60

Postition- Fire-4

City- Ormond Beach

State- FL

Retirement Type- Accidental Disability

Retirement Date- November 17, 1994

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#14

Name- Rosemary Clark

Annual Earning- $114,725.64

Postition- Police-5

City- Chepachet

State- RI

Retirement Type- Beneficiary

Retirement Date- August 1, 2004

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#13

Name- John Gannon

Annual Earning- $117,318.60

Postition-Police-5

City- Coventry

State- RI

Retirement Type- Accidental Disability

Retirement Date- January 24, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#12

Name- Marcia Moise

Annual Earning- $119,791.20

Postition- Fire-4

City- Jupiter

State- FL

Retirement Type- Beneficiary

Retirement Date- April 1, 1997

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#11

Name- Robert Read

Annual Earning- $123,105.00

Postition- Fire-4

City- Cranston

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#10

Name- Alfred Bertoncini

Annual Earning- $123,599.16

Postition- Fire-4

City- Smithfield

State- RI

Retirement Type- Service

Retirement Date- December 19,1994

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#9

Name- Victor Dichiara

Annual Earning- $126,845.28

Postition- Fire-4

City- East Greenwich

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 17, 1992

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#8

Name- Edmund Calcagni

Annual Earning- $135,702.72

Postition- Police-5

City- North Providence

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 29, 1990

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#7

Name- James Kelly

Annual Earning- $137,336.04

Postition- Fire-4

City- Greenville

State- RI

Retirement Type- Accidental Disability

Retirement Date- September 28, 1988

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#6

Name- Vincent Delisi

Annual Earning- $145,520.88

Postition- Fire-4

City- North Providence

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 17, 1992

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#5

Name- William Manchester

Annual Earning- $148,839.84

Postition- Fire-4

City- Warwick

State- RI

Retirement Type- Accidental Disability

Retirement Date- December 19, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#4

Name- William D'Iorio

Annual Earning- $156,870.60

Postition- Fire-4

City- Smithfield

State- RI

Retirement Type- Accidental Disability

Retirement Date- Novemver 29, 1990

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#3

Name- Anthony Sauro

Annual Earning- $161,487.24

Postition- Fire-4

City- Johnston

State- RI

Retirement Type- Accidental Disability

Retirement Date- July 5, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#2

Name- Robert Anthony

Annual Earning- $162,944.04

Postition- Fire-4

City- Smithfield

State- RI

Retirement Type- Accidental Disability

Retirement Date- September 25, 1991

Source: This information was secured through a FOIA request from the city of Providence.

Prev Next

#1

Name- Gilbert McLaughlin

Annual Earning- $196,813.08

Postition- Fire-4

City- Warwick

State- RI

Retirement Type- Accidental Disability

Retirement Date- October 24, 1991

Source: This information was secured through a FOIA request from the city of Providence.

 
 

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Comments:

SEIDLE YOUR WRONG ON THIS ONE. YOU HAVE TO HIT THE MARKET PERFECT FOR THE GAINS YOUR CLAIMING. THAT IS AN IMPOSSIBLE SITUATION. YOU CAN WIN SHOOTING CRAPS TO BUT IT IS A GAMBLE. SORRY I DISAGREE WITH YOU ON THIS.

Comment #1 by Private Investigator on 2014 07 24

IT IS CALLED DIVERSIFY. SOME PEOPLE MAKE MONEY WHEN THE MARKET GOES DOWN. IF THE MARKET GOES DOWN AND THEN WOULD YOU BE SAYING IT IS ALRIGHT THAT PENSION FUND LOST MONEY. YOUR THEORY IS INCORRECT.

Comment #2 by Private Investigator on 2014 07 24

A good rule of thumb for "prudent " asset allocation in a Public Pension Plan is 60 % stocks and 40% fixed Income. Comparing any fiduciaries return , including all state and municipal plans to the S& P 500 is naive and in fact a 100% exposure to stocks is clearly not prudent. So those $ amounts above make good headlines but are irrelevant. I will be doing an in depth analysis to build on Kates reporting here. One thing for sure , this state has too many high fee hedge funds.The same results can be had cheaper.

Comment #3 by michael riley on 2014 07 24

THANK YOU MIKE. THIS IS CAMPAIGN PROPAGANDA. I TAKE GINA ANYDAY OVER TAVERAS, SHE HAS THE BRAINS AND THE GUTS.

Comment #4 by Private Investigator on 2014 07 24

gotta love it when democrats screw over stupid democrat unions

Comment #5 by llik amabo on 2014 07 24

Great job Gina! Let your personal anti-gun feelings screw us in the end when you pulled RI's investment in the gun industry. A sector that saw INSANE profits over the last two years. You are useless!

Comment #6 by dirk diggler on 2014 07 24

Calpers, other pension funds pull back from hedge funds.

http://www.marketwatch.com/story/calpers-other-pension-funds-pull-back-from-hedge-funds-2014-07-24

Comment #7 by Why Us on 2014 07 24

Mr Sedle's comments are "spot on." Article today in the WSJournal indicates that many pension funds including the largest are pulling out of hedge funds due to poor performance, including CALPERS, the country's largest. A Calpers board member asked Warren Buffet what he thought about using hedge funds. Here is the answer verbation from the WSJ "Mr. Meiberger said at the meeting that he had sought out Warren Buffett's advice on the matter. The billionaire investor's handwritten response: "I would not go with hedge funds—would prefer index funds."
Now if Ms Raimondo had used index funds the past two years, she would have performed at or beyond what Mr. Seidle indicates.

Comment #8 by Donald Galamaga on 2014 07 24




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