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Leveraged pensions -- OK?

EconoMeter panel considers leveraging of public pensions

Roger Showley, U-T SAN DIEGO

Friday, September 26, 2014

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Kelly Cunningham, National University System
Answer: NO

Investing pension funds puts the public at risk to cover for all obligated employee retirement benefits. Leveraging pension dollars by a 5:1 ratio is extremely risky. Even with limiting such investments to 20 percent of overall asset funds, the entire funding could be wiped out with the leverage ratio at 5. In assuming such a high level of risk, very high returns should also be anticipated, yet the county’s investment record considerably lags current performance of other California pension funds. Clearly a much less risk strategy should be utilized by the county to provide for retirement benefit obligations.