Last Friday, April 6, Maine joined 20-plus other states that have pension forfeiture laws for convicted public employees. Forfeiture is the loss of property or money because of a breach of a law.
As is the case with most pension plan components, the laws reflect a wide range of differences. Read more
An article in Sunday’s New York Times, “Pensions Find Riskier Funds Fail to Pay Off” by Julie Creswell, focuses on alternatives, pointing out that public pension funds that have made larger allocations to this asset class have the same—or in some cases, lower—returns as pension funds with little or no allocation to alternatives. Meanwhile, since alternatives usually cost more to manage, some funds have spent more in asset management fees than others, yet, according to Creswell, don’t have the returns to justify the added expense.
The chief problem with the article is that it indiscriminately treats these alternatives as a monolithic asset class. And this is misleading as there are big differences between and among the components that comprise the asset class known as alternatives: hedge funds, private equities, and real estate. These differences include variations in historic and projected returns, risk levels, correlation with other asset classes, and others. Read more