Treasurer Loftis testifies to state Senate committee about need for more transparency in South Carolina's State Pension Fund
Tuesday, January 31, 2012
(Columbia, SC) – Today, State Treasurer Curtis Loftis highlighted several problems facing South Carolina’s $26 billion pension fund in testimony before the state Senate Finance Retirement Subcommittee. Treasurer Loftis and his staff have spent the past year studying the plan.
The Treasurer’s main concerns include the fund not making as much money as its peers, complex alternative investments making up more than half of the pension fund and significant investment fees which have skyrocketed to $343 million in 2011.
“We are allowing outsiders control over our fund who have virtually no accountability or transparency,” Treasurer Loftis said. “To put billions of public money into the hands of third party managers is simply unacceptable.”
Treasurer Loftis pointed out several areas concerning the S. C. pension fund, including:
- Investment management fees have ballooned from $31 million in 2005 to $343 million in 2011
- Full time employees have increased from three in 2006 to 23 in 2011
- S.C.’s pension fund one year gross underperformed by 2.8%, with a 18.6% return compared with the 21.4% national median return.
- S.C.’s pension fund has underperformed our peers in the past one, three and five year periods.
- S.C.’s 50% allocation in complex “alternative” investments, compared with 12.7% national average.
- Contrary to state law, 70% of retirement funds are in the custody of third party investment managers instead of the State Treasurer.
- A September 2011 independent risk assessment of the plan found seven areas of high risk.
“State employees, retirees, their families and the entire state economy depend on a stable pension fund that delivers solid returns,” Treasurer Loftis said. “All retirement systems assets must be under control of the state, not third party money managers. We do not need new legislation; we just have to enforce the existing laws. Transparency and accountability are the appropriate tools to ensure that the pension fund makes money and safeguards the pensions of our state workers.”
CLICK HERE for supporting documents.
CLICK HERE for full text of the Treasurer’s testimony.