Month: August 2023

State legislators: Oregon treasury’s investment choices create risk to us all

Mary Pat Campbell

Link: https://www.portlandtribune.com/opinion/state-legislators-oregon-treasury-s-investment-choices-create-risk-to-us-all/article_65cae490-406b-11ee-a841-a3bbfbc99a7f.html

Excerpt:

The Oregon Public Employee Retirement System (PERS) pension fund has been in the national spotlight recently because of risks from private investments hidden from the public. What risks? Risk to public employees’ retirement, risk to taxpayers who have to pick up the shortfall, risk to workers as private equity asset managers rake in huge profits at Oregonians’ expense, risk to all Oregonians as private equity undermines our communities, and risk to the climate as private equity firms are uniquely exposed to fossil fuel companies.

A recent article in the business section of The New York Times, “The Risks Hidden in Public Pension Funds,” focuses on the Oregon treasury’s unusually large private investments in PERS. The treasury has long hailed its private equity investments for producing high rates of return, overlooking warning signs that the managers report earnings that turn out to be overstated. The Times reported, “they aren’t taking account of the true risks embedded in private equity. Oregon’s pension fund is over 40% more volatile than its own reported statistics show.”

…..

Divest Oregon’s 2022 report, “Oregon Treasury’s Private Investment Transparency Problem,” documents that more than 50% of PERS is in private investments, with various labels (“private equity,” “alternatives,” “opportunity,” even real estate).

These private funds are heavily invested in coal, oil and gas. The treasury increased its investments in fossil fuels in private investments from 2021 to 2022 (the most recent data released by the state) and continues to invest billions in the fossil fuel industry in 2023, for example in the private investment firm GNP. While Divest Oregon applauds Treasurer Tobias Read in his work to create a “decarbonization plan” for PERS, the treasurer must respond to calls to stop new private investments that fund the climate crisis.

Author(s): State Sen. Jeff Golden and state Reps. Khanh Pham and Mark Gamba

Publication Date: 29 Aug 2023

Publication Site: Portland Tribune

Public Pensions: Double-Check Those ‘Shadow Banker’ Investments

Mary Pat Campbell

Link:https://www.governing.com/finance/public-pensions-double-check-those-shadow-banker-investments

Excerpt:

For almost a decade leading up to 2021, bond yields were suppressed by low inflation and central bank stimulus. To make up for scanty interest rates on their bond investments, many public pension funds followed the lead of their consultants and shifted some of their portfolios into private credit funds. These “shadow bankers” have taken market share from traditional lenders, seeking higher interest rates by lending to non-prime borrowers.

Even during the pandemic, this strategy worked pretty well, but now skeptics are warning that a tipping point may be coming if double-digit borrowing costs trigger defaults. It’s time for pension trustees and staff to double-check what’s under the hood.

For the most part, the worst that many will find is some headline risk with private lending funds that underwrite the riskiest loans in this industry. Even for the weakest of those, however, the problem will not likely be as severe as the underwater mortgages that got sliced, diced and rolled up into worthless paper going into the global financial crisis of 2008. And until and unless the economy actually enters a full-blown recession, many of the underwater players will still have time to work out their positions.

The point here is not to sound a false alarm or besmirch the private credit industry. Rather, it’s highlighting what could eventually become soft spots in some pension portfolios in time to avoid doubling down into higher risks and to encourage pre-emptive staff work to demonstrate and document vigilant portfolio oversight.

Author(s):Girard Miller

Publication Date: 8 Aug 2023

Publication Site: Governing

U.S. Suicide Deaths Rose in 2022, C.D.C. Estimates Say

Mary Pat Campbell

Link: https://www.nytimes.com/2023/08/11/well/mind/suicide-deaths-2022-cdc.html

Excerpt:

The estimated number of suicide deaths in the United States rose to nearly 50,000 in 2022, according to provisional data released on Thursday from the Centers for Disease Control and Prevention. The total would be an increase of approximately 2.6 percent since 2021.

The C.D.C. estimates the overall number of deaths to be 49,449 but has not yet calculated the suicide rates for 2022. Given that the U.S. population grew by about 0.4 percent in 2022, a 2.6 percent increase in deaths indicates that suicide rates are continuing to rise, although not universally among all groups.

Suicide deaths have fluctuated somewhat over the years and declined in 2019 and 2020. But the overall suicide rate, or the number of suicides per 100,000 people, has increased by about 35 percent over the last two decades. People 65 and older had the highest increase in the number of deaths by suicide in 2022 among the various age groups.

Author(s):Christina Caron

Publication Date: 11 Aug 2023

Publication Site: NY Times

No Hope In Sight For Chicago’s Worst-In-The-Nation Pension Plans

Mary Pat Campbell

Link:https://www.forbes.com/sites/ebauer/2023/08/01/no-hope-in-sight-for-chicagos-worst-in-the-nation-pension-plans/?sh=4fd6218f24c2

Excerpt:

Back on July 18, the Equable Institute released the 2023 version of its annual State of Pensions report, which means that, yes, it’s time for another check-in on these infamously-poorly-funded pension plans. Among the wealth of tables is a list of the best and worst-funded of the 58 local pension plans studied, and, yes, you guessed it, the bottom five spots are Chicago plans, with the bottom three at levels far below all others:

  • Municipal employees, 21% funded,
  • Chicago police, 21.8% funded, and
  • Chicago fire, 18.8% funded.

Combined with the Chicago Laborers’ pension fund, with a 41% funded status, the pensions for which the city bears a direct responsibility have a total pension debt on a market value of assets basis of $35 billion. (This data is from the actual reports*, released in May, which doesn’t match the Equable report precisely.) Spot fifth-worst is taken up by the Chicago Teachers, at 42.4% funded, and the first non-Chicago system in their list, Dallas Police & Fire at 45.2%, is twice as well funded, percentage-point-wise, as the Terrible Trio.

…..

What’s more, Ralph Martire and his Center for Tax and Budget Accountability continue to promote what he calls “reamortization” as a solution to the problem, both through an April Chicago Sun Times commentary and through the release of a report, “Understanding – and Resolving Illinois’ Pension Funding Challenges” (which is an update of a prior proposal). This proposal, which is directed at Illinois pensions but is clearly meant based on other comments to be an all-purpose fix, sounds innocuous, as merely a sort of “refinancing” as one might with a mortgage, but it’s really much more as he proposes to

  • Reduce the funded status target from 90% to 80%, based on the claim that the GAO deems this funded status to be the right target for a “healthy” plan (whether he deliberately misleads or not, he is wrong here, the National Association of State Retirement Administrators or NASRA clearly explained more than a decade ago that 100% funding is always the right target and the only significance of an 80% level is that private sector pension law requires plans funded less than 80% to take immediate corrective action rather than have a long-term funding schedule, and the American Academy of Actuaries more explicitly calls this a “myth”);
  • Issue large sums of Pension Obligation Bonds, which were questionable already when they first began promoting this but are now a terrible idea with our current high bond rates, all the more so for a low-credit-rating city such as Chicago; and
  • Move contributions from last day of the fiscal year to the first day, which he argues would be a gain of a year’s investment return while forgetting that it requires the city to have this money on Day 1 and forgo the other uses it would have.

Author(s): Elizabeth Bauer

Publication Date: 1 Aug 2023

Publication Site: Forbes

PSNI apologises to officers and civilian staff after major security breach

Mary Pat Campbell

Link: https://m.belfasttelegraph.co.uk/news/northern-ireland/psni-apologises-to-officers-and-civilian-staff-after-major-security-breach/a1823676448.html?=123&s=03

Graphic:

Additional: https://twitter.com/owenboswarva/status/1688975359604101129/photo/1

Excerpt:

However, a second tab in the spreadsheet contained multiple entries in relation to more than 10,000 individuals. For each individual, there are 32 pieces of data meaning that in total, there are about 345,000 pieces of data in the file.

The spreadsheet, which has been seen by the Belfast Telegraph after we were alerted to it by a relative of a serving officer, includes each officer’s service number, their status, their gender, their contract type, their last name and initials, details of how much of the week they work, and their rank.

It also includes the location where they are based (but not their home address), their duty type (from chief constable to detective, intelligence officer and so on), details of their unit (such as the anti-corruption unit or the vetting department), their branch and department, and other technical information about their employment.

There are 10,799 entries in the database. There are 9,276 police officers and police staff. It is not clear if the additional entries relate to other employees or former employees.

The data has been removed from the internet.

There are details of staff who are suspended, on career breaks, or partly retired.

It reveals members of the organised crime unit, telecom liaison officers, intelligence officers stationed at ports and airports, PSNI pilots in its air support unit, officers in the surveillance unit and – of acute sensitivity – almost 40 PSNI staff based at MI5’s headquarters in Holywood.

There are a tiny number of individuals whose unit is given as “secret”. But although that does not disclose precisely what they do, it marks them out as operating in an acutely sensitive area – and then gives their name.

Author(s): Sam McBride and Liam Tunney

Publication Date: 8 Aug 2023

Publication Site: Belfast Telegraph