A Very Interesting Tidbit About MOSERS Over at Bloomberg.com
Bloomberg.com, in a very interesting story about the problems facing public pension funds, reports the following (link via Drudge):
The Missouri State Employees’ Retirement System invested $25 million in half the equity portion of the BlackRock Senior Income Series 2006 collateralized loan obligation, managed by New York-based BlackRock Inc. Moody’s last month cut ratings on parts of the debt, saying a drop in value of the underlying collateral may cause “an event of default.”
Chris Rackers, the manager of investment policy and communication for the Missouri fund, didn’t return calls seeking comment.
This seems somewhat frightening. It also seems a good opportunity to plug our recent study of Missouri’s pension funds by the other Richard Dreyfuss.
Sounds great – eventually stakes may have to raise taxes/ assessments to plug the hole in these pension funds, which benefit only a limited number of state employees. Other options would be to issue specific bond issues to fund the whole, but that will raise the overall cost of borrowing for the state by increasing its debt profile and will need to be paid off by revenue somewhere. The problem is not investment losses as those have hit everyone, its the issue of gov’t managing retirement money in the first place.
Comment by Mike — January 15, 2009 @ 3:37 a.m.