Treasurer Curtis Loftis Assails High Pension Fund Fees

by Hal Millard
State Treasurer Curtis Loftis' assault on management of the S.C. pension fund continues.

In recent weeks on his Facebook page and website, the treasurer has lobbed brickbats at the S.C. Investment Commission for alleged mismanagement of the public employees' retirement fund that he claimed has cost the state $7 billion in earnings.

In his latest attack against the commission – of which Loftis is the sole elected member – the treasurer is now calling attention to billions in outside investment fees paid by the state for a pension fund deemed to be the worst-performing state retirement fund in the nation.

It’s unbelievable but true,” said Loftis. “The S.C. Retirement System Investment Commission paid $2.6 billion in investment fees and their returns (earnings) are dead last for the 10-year period ending June 30, 2015.”

The roughly $30 billion fund serves around 400,000 participants statewide.

“Last week, I revealed the Investment Commission’s underperformance for that same period cost us $7 billion dollars and that you, the taxpayers and government employees will have to pay their losses,” Loftis said on his Facebook page.

“This week, I'm disclosing the Investment Commission paid $2.6 billion in fees for the privilege of being in last place in returns. And of course, you have to pay those as well.”

Loftis has been on a political jihad against the commission and its management of the fund since his election in 2010. In recent weeks he has upped the ante, taking his case directly to his supporters online in an attempt to bring more attention to the issue, which he said will not only affect those paying into the system but ultimately state taxpayers as well.

Loftis is a critic of the fund's heavy reliance on alternative and “risky” investment in such things as real estate, hedge funds and private equities, where firms often employ fuzzy accounting rules to obscure their costs. Loftis has waged a campaign to not only force the state into safer investments such as simple index funds, but also shed light on the often high and hidden fees such investments incur.

According to reports, 47% of the state's retirement fund portfolio is made of such investments, which is more than double the 21% of the median holding of such investments nationwide, according to the National Conference on Public Employee Retirement Systems.

“The Investment Commission does not have to pay the retirement bills, you do,” Loftis said. “Paying outrageous investment fees and expenses means the retirement system must depend on you to pay its massive bills.... They’ve created an investment fund that pays too much in fees and earns too little in returns and that means more debt. Debt that takes priority over tax dollars intended for roads, schools, police and healthcare.”

While not a complete assessment, state pension fund costs last year alone were identified to be $468 million, or 1.56% of fund assets. The median pension fund nationwide, meantime, paid just 0.57% of assets.
via the Lexington County Chronicle on Sep 17, 2015