Posts Tagged ‘san diego pensions’
The U-T has a great article on changes in the portfolio mix of the San Diego County employee pension fund. In 2009, the county fired the fund manager after losses totaling $2 billion in 2008. Assuming that the fund had about $9 billion at the time, that is a loss of 22%, compared withan an S&P loss of 37% for the same year. Taken in context that doesn’t seem that bad. The new fund managers have shifted the mix to include emerging market debt (Russia, Brazil and Mexico) as well as in hedge funds.
I find the 2 basis point (2%) management fee in the new contract to be too high. Fees are a drag on performance, and frankly, the county should be shooting for something closer to 1%. Correction: A commenter pointed out that two basis points is .02%, not 2%. I should have checked the math. The fees compare favorably with the Federal Government’s Thrift Savings Plan. I wouldn’t mind hearing from any professional financial planners on this subject. I am not qualified to say whether the investment strategy is good or not, I just know that above average returns generally do not prevail.
This is no longer news, but nevertheless important. Carl DeMaio announced that the pension reform initiative had over 145,000 signatures, with 93,346 needed to qualify. It appears likely that the initiative will qualify for the ballot. The furious counterattack by labor on even allowing a vote on the measure has been curious. Clearly they see a huge threat in this initiative. The left of center OBRAG had this to say:
The proposed initiative would eliminate pensions for all new city hires except police officers and replace them with a 401(k)-type plan. It also includes a five-year salary freeze on the pensionable pay of current workers and a cap on future police pensions, among other things. City workers would not be eligible for Social Security under the plan.
I thought the grocery unions might be on strike at the time of this writing, and they still might by the time you read this. However, a 7:10 p.m. deadline came and went today without a strike. This is great news, and perhaps a strike can be averted. Despite my antipathy for the union position and belief that they will do immense harm to themselves by striking, a strike will be bad for the region given all of our other economic stress. From today’s U-T:
Is a promise that won’t be kept really a promise at all? I was thinking about the issue of defined contribution plans (401(k)) vs defined benefit plans for city workers that will be on the ballot in June 2012. The Voice of San Diego summarized the issue neatly:
It [the ballot measure] was an agreement to unite and to set in motion what could be the climax of a nine-year drama about the city of San Diego’s mounting pension liabilities. The city never set aside money to meet those obligations. And the bills due today are suffocating other city services while the distrust the decisions created destroyed the city’s ability to ask taxpayers to rescue it.
I have been a harsh critic of Mayor Sanders at times. But I need to give credit where it is due; he worked with purveyors of competing reform plans to come up with a single ballot measure. This increases the odds that a measure will pass, because there will be a unified reform effort. Yesterday’s U-T has the news:
The new measure, to be announced Tuesday, combines elements from a proposal two weeks ago by Jerry Sanders and Councilman Kevin Faulconer with ideas from Councilman Carl DeMaio.