The money pool: about public pensions

The attitude has changed about pensions. It used to be that a pension was precious and funds were “invested in safe government securities, such as bonds or U.S. Treasury bills. Professional managers oversaw the funds with little political interference.” Pension funds are no longer valued in that way.

baby boomers whose politics were forged in the 1960s and ’70s began using those pension funds to advance their social visions. Investments designed for the long-term welfare of retirees began to evolve into a political hammer. Some good occasionally came from the effort, as when companies were pushed to become more accountable in their practices. But advocacy groups often used their clout to direct money into pet social projects with dubious fiduciary prospects. Sometimes the money went to the very companies and financial instruments that, in the wake of the market meltdown, are now widely derided.[Jon Entine, The Next Catastrophe, reasononline]

It is only when you feel secure about your future that you can put it at risk. The parents did not take future fiscal security for granted but the children do.

The use of political criteria may be fine for affluent investors and activists who gamble their own money and assume the extra risk, but pension funds should be held to a higher standard.

It seems that ideologues who get a bit big for their britches may end up busting a seam. That will not be pretty.

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