Brown Calls for Restoration of State Retirees’ COLAs
Thursday, June 07, 2018
“Matt would work with the legislature and the State Investment Commission to make the changes to the fund,” said Brown’s spokesman in an email to GoLocal on Wednesday.
“The investments moved out of the defined benefit in 2011 have vastly underperformed, and the fees now stand at $80 million annually. Drastically reducing those fees and improving performance by moving those investments into more stable, better-performing funds would cover the cost of the annual COLAs, per our research,” he added.
According to the campaign’s press release, “Governor Raimondo’s drastic pension cuts needlessly hurt public employees and retirees, exposed their retirement funds to even greater risk, and will cost the state’s taxpayers millions more long-term.”
Brown says that he will ensure a number of policy changes relating to the funds, but it is unclear as some of the promises by Brown fall under the auspices of the office of the General Treasurer or the State Investment Commission’s board.
Brown says he will seek "full transparency for investments of public money, including public release of current management contracts, investment fees, and the portfolio of investments; speeding disinvestment from risky Wall Street hedge funds and venture capital firms and move the money back into stable, lower-fee, better-performing index funds, using the savings from reduced investor fees and improved investment performance to restore the annual COLAs for current and future retirees."
Brown on Offensive
Brown attacked Raimondo saying in the release, “Then-Treasurer Raimondo told Rhode Islanders the state needed to cut the pensions for teachers, cops and firefighters while moving at least $1 billion into expensive, high-risk hedge funds and venture capital firms. These investments have consistently underperformed, and have already cost the state more than $214 million in fees. That includes firms like Point Judith, a venture capital firm Raimondo founded that the state invests with and Raimondo makes money from.”
“What was sold as courageous leadership - 'taking on the unions' - was, in fact, an egregious case of kicking the can down the road while rewarding the Governor’s most generous Wall Street donors,” Brown said. “It was gross fiscal mismanagement that hurt Rhode Island while boosting Governor Raimondo’s Wall Street fundraising.
“Even though the state’s pension investment with Point Judith consistently underperforms, Point Judith still gets paid and Governor Raimondo gets a cut. No one should use public office for personal gain,” Brown said. “She should do the right thing, and return her cut of the Point Judith fees to retirees.”
Edward “Ted” Siedle, a former US Securities and Exchange Commission lawyer and frequent critic of Raimondo’s decision to gut the state’s pension system, says Brown’s plan to restore the cost of living increases for retirees is "both realistic, and the right thing to do."
“Prudent, versus political, management of the pension would allow the state to fully fund the COLAs,” Siedle said.
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