Tags: public | pension | funds | CalPERS

CNNMoney: Public Pension Funds Wield the Power Behind the Stock Market Veil

By    |   Thursday, 19 June 2014 12:44 PM

America's six largest public pension funds wield immense power on Wall Street and throughout the investment community, according to CNNMoney.

Most people would be surprised to learn who has the most influence on Wall Street.

"It's not corporate bosses or the even the 1 percent. Rather, its teachers, police officers, firefighters or anyone else in a large public pension," CNNMoney declared.

Editor's Note:
5 Signs Stock Market Will Collapse in 2013

Their influence is directly related to the staggering amounts of money the biggest public pension funds have at their disposal.

At the top of the pyramid is the California Public Employees' Retirement System (CalPERS), with $375 billion in assets serving 1.7 million state and local government employees and retirees.

CalPERS "operates more like a shrewd activist investor than a conservative money manager," said CNNMoney.

"Each year, CalPERS releases a Focus List of 1,000 public companies it owns and believes are underperforming. From there, it aggressively asserts its power by campaigning for change in management, board membership, executive compensation, risk management or anything else it deems worthy of fixing."

Next on the list is the California State Teachers' Retirement System, with $183 billion in assets serving 600,000 public school teachers.

"California's teachers are a politically active bunch. The pension fund requires that any potential investment meets a comprehensive list of so-called risk factors that take into account its 'social, human and environmental impacts,'" CNNMoney said.

Third is the State Board of Administration of Florida (SBA), with $178 billion in assets, serving public employees in Florida plus hurricane insurance companies. The SBA is a significant investor in alternative investments, and has placed $3 billion of its assets with hedge funds to invest, plus 8 percent of its assets in the hands of private equity.

The other largest public pension funds are the New York State Common Retirement Fund, with $176 billion in assets; the New York City Retirement Systems, with $145 billion; and the Teacher Retirement System of Texas, with $120 billion.

While the largest U.S. public pension funds may seem lavishly endowed, that's definitely not the case nationwide, where many state and local plans have overpromised and are straining taxpayer resources.

A new study shows U.S. state and local government pensions have at least $1.1 trillion less than they need for promised retirement benefits, even after recent stock market gains and increased contributions from taxpayers, Bloomberg reported.

U.S. public pensions had approximately 72 percent of the money required to meet retirement obligations in 2013, according to the Center for Retirement Research at Boston College. The shortfall last year was even after governments paid more into the funds, 83 percent of their required annual contributions, up from 81 percent the prior year, Bloomberg said.

Editor's Note: 5 Signs Stock Market Will Collapse in 2013

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America's six largest public pension funds wield immense power on Wall Street and throughout the investment community, according to CNNMoney.
public, pension, funds, CalPERS
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2014-44-19
Thursday, 19 June 2014 12:44 PM
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