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By Jon Coupal
“Just a flesh wound,” protests the Black Knight in Monty Python’s famous “Holy Grail” comedy, challenging King Arthur to continue their duel even after all his limbs have been severed.
Similar happy talk is coming from the management of California’s big public employee pension funds after CalPERS, the nation’s largest institutional investor, posted a loss of $29 billion. When CalPERS reported on its end-of-fiscal-year performance, its July 20th press release was headlined, “Challenging global public markets, strong private market returns lead to varied performance.” Varied performance, indeed.
Overall, the hit to the system’s portfolio of investments was a 6.1% decline for the fiscal year that ended June 30. Stocks and bonds took the biggest hit while its real estate holdings actually gained, helping to avoid an even a bigger loss. But the drop from $469 billion to $440 billion is bad news for taxpayers.
Relax, say those who defend CalPERS and its system of “defined benefits.”
Ted Toppin, the executive director of the Professional Engineers in California Government, one of the state’s most powerful unions whose members reap big pensions under CalPERS, says in a recent Capitol Weekly piece, “Don’t be alarmed” over these record losses.
Well, of course not. His members and all participants in CalPERS — both currently retired or employed — can afford to relax because they know that if the investments by CalPERS are insufficient to cover their benefits, taxpayers are on the hook. So at the same time private-sector employees and the self-employed watch their own retirement portfolios sink, they also have to worry about higher taxes to cover the losses of the big public pension funds.
Fiscal watchdogs have been warning about this for more than 40 years only to be ignored by our elected leadership, whose cozy relationship with public-sector unions makes even modest pension reform nearly impossible.
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