Movement on Pension Fund Consolidation

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Pioneer brought up the idea of consolidation underperforming local pension funds in our May 2006 paper, Leaving Money on the Table. We noted that underperformance (relative to the major state fund, PRIM) had left $1.6 billion on the table in the ten year period ending in 2004.

We recommended folding all the underperforming funds into PRIT.

The Governor recommended folding all the funds that underperformed by 2.25% over 5 years and were below 80% funded into PRIT.

Now, the Joint Committee on Public Service has recommended folding all funds that underperformed by 2% over 10 years and were below 65% funded into PRIT. The bill would have an immediate effect on 25 public pension funds that have left an estimated $700 million on the table in the past ten years. See the names of the funds and their performance figures in this chart — Joint Committee Data on Underperforming Funds.

These are all positive steps forward, for fiscal stability and municipal relief. Let’s wait and see what the full Legislature think of them.