Treasurer Wheeler will ask to dump Wall Street consultants
SALEM, Ore. (AP) - State Treasurer Ted Wheeler plans to ask the Oregon Legislature for authority to hire more investment managers to replace some of the Wall Street consultants now handling portions of the state pension fund.
The treasurer's office says state workers could do the same work for less money.
An annual analysis of the world's largest pension systems found Oregon spends more than average on investment management and could save about $12 million a year. The report by CEM Benchmarking of Toronto found Oregon spends 0.69 percent of the $60 billion pension fund on management each year, compared with an average rate of 0.59 percent.
Wheeler will ask for hiring authority during the legislative session that begins in February, Treasury spokesman James Sinks told the Salem Statesman Journal.
The bottom line for the treasurer, Sinks said, is, "Why would you pay someone to do something when you can do it yourself for less?"
The same report also found that Oregon gets better investment returns than most of its peers. That's partly because Oregon has emphasized real estate and private equity funds, which weathered the Great Recession better than the bonds and publicly traded stocks that comprise most pension funds.
That focus probably wouldn't change much with more in-house management, although some emphasis would probably shift from private to public stocks, Sinks said.
Public pension costs have been in the spotlight lately as local governments and the state contend with a sharp rise in required taxpayer contributions due to substantial losses during the recession.
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Information from: Statesman Journal.
Copyright 2012 The Associated Press.
Uh. well, we pay more and get a better return. No possibility of a connection there, I suppose.
 @MechanicÂ
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The city of Portland uses in-house people fro this and has always yielded more money than the state even though the state fund is considerably larger.
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Indeed when r-tard Sam decided to use 'local" banks for the city's fund even at the crappy rates they offered the city still gets more dividend per dollar than the state does.
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And the people who do this are "managers" so don't worry l812 they won't get PERS.
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Well at least that is a little less of wall streets influence.
The bottom line for the treasurer, Sinks said, is, "Why would you pay someone to do something when you can do it yourself for less?"
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Since when has the State ever doen anything for less than the private sector? Wheeler already pays find managers more than $200K per year plus benefits and PERS and they get bonuses even if they lose money, as long as they lose less than the benchmark average. The real kicker is these high paid fund managers don't do any actual investment, they just watch the investment firms they hire to do the investment. Effectively the public taxpayer pays twice for the same service.
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Why not just compensate investment firms based on performance? If they make more than the benchmark average they get a negotiated percentage of the profits. If they make less than the benchmark average or lose money, they get nothing. Simple.
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BTW - .69% of $60 billion is $414,000,000!
1812.........................Great post and great idea. But Pay for Performance??? In Oregon????
Hell, we can't even get the teachers unions to go for that. Its a concept that is lost in this State
@Rob C 503 In part that is because of our society's trend toward lack of personal responsibility and accountablity and it part it is because the unions demand their members not be held responsible and accountable. We are in a downward spiral that may not be reversible; like Greece.