The Financial Standard: US project to end pension politics

An American non-profit – led by a former state treasurer – is demanding pension plan managers stop putting politics before prudent investment.

The Institute for Pension Fund Integrity (IPFI) says if a fund manager is investing pension money based on political reasons and not purely on the risk or return, they are weakening the fund and undermining its integrity.

“Public pension fund managers have a fiduciary responsibility to their beneficiaries to make rational decisions based on risk and return, not politics. As the former state treasurer of Connecticut and sole fiduciary of the Connecticut pension system, I know the importance of keeping politics out of fiduciary decisions. I started IPFI to help inform beneficiaries and policy leaders, and to bring this issue to the forefront,” former Connecticut state treasurer Christopher B. Burnham said.

Only 30% of the 6276 pension funds across US are adequately funded using optimistic actuarial assumptions, according to the institute. No pension fund is more than 63% funded, if conservative actuarial assumptions are used. States alone have $6 trillion in unfunded liabilities – not counting the thousands of county and city pensions.