The Reason Behind Florida Pension Reform Bills

FRS Pension funds to be looted?

Don't you wonder why this bill was submitted in the first place?

What could be the motive for changing a solvent pension fund so that it pays out less to the beneficiaries?

The FRS pension is solvent, well funded and perfectly capable of meeting it's obligations as it stands.*

It's been my experience that politicians rarely do anything unless they, or their friends directly benefit from it, so I did a little digging *Perhaps the Forbes article linked below explains it all.*

The article basically states that the state of Fl *will be making costly and unnecessary changes as to how it invests pension funds. *Surprise, surprise, FL politicians have friends in the hedge fund business that will make billions from these FRS investment changes. * Also, as a result of these changes FRS investment returns will plunge. *

In order to throw this kind of money to their friends, POLITICIANS will have to pay out less to FRS pensioners. Otherwise the FRS losses would not be sustainable and the scheme to loot the fund would be exposed.*

In my opinion, the bills to change the FRS pension are not being submitted to fix the pension, how could they be? *The pension is not broken, it's one of the strongest in the nation.*

If not to fix the system, then why submit bills that mandate such draconian cuts in benefits?

Is it possible that they were submitted so as to allow pension funds to be looted more easily.*

It seems that the money that the pensioners won't be receiving, if the bills pass, will be going to hedge fund managers, who I suspect will be kicking it back to Fl politicians. Always follow the money trail, it usually leads to the truth.*

Please Read the below article, tell me what you think is going on.*

http://blogs.forbes.com/edwardsiedle...aires-9-23-10/

Read this also:
http://www.forbes.com/2010/07/20/flo...isclosure.html

And this:
http://www.forbes.com/2010/03/19/pub...da-madoff.html

Edward Siedle
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Florida State Pension To Transfer Wealth to Hedge Fund and Private Equity Billionaires (9-23-10)
Sep. 23 2010 - 8:09 pm | 209 views | 0 recommendations | 1 comment
The decision by the Board of Trustees of the Florida Retirement System to gamble billions more of pension assets in so-called alternative investments is reckless and irresponsible. The one certain outcome related to this roll-of-dice is that vast wealth will be transferred from taxpayers of the State of Florida and participants in the state pension fund to a select group of individuals that have already grown rich risking other people’s money – at a time when neither the taxpayers nor the participants can afford such generosity. The number of investment managers hired by the fund, as well as the fees paid to those managers will grow exponentially. Tragically, neither the investment performance of the fund nor its level of funding will improve.
This departure from prudent investment standards is utterly lacking investment merit. Warren Buffett, widely recognized as one of the world’s greatest investors, has repeatedly stated that the onerous fees hedge funds and other alternative managers demand are to be avoided and that a low cost S&P 500 index fund will outperform these pricey poker players. Recently Buffett made a very public bet against hedge funds. http://money.cnn.com/2008/06/04/news/ne ... t.fortune/

Apparently the Trustees of the Florida Retirement System think they are smarter than Warren Buffett. Unfortunately for Florida taxpayers and participants in the Florida Retirement System, they aren’t. The Trustees would be well advised to study Buffett’s comments on the difference between investing and speculation. When one of the largest state pensions in the country mistakes speculation for investing, the state’s future financial well-being is put in jeopardy. While the spectacular demise of the local government investment pool horrendously mismanaged by the State Board of Administration (with billions still unaccounted for) should have humbled the SBA, it appears that having escaped well-deserved harsh criticism regarding the matter the SBA has been emboldened.
How risky is investing in alternatives? Extremely– according to the United States Government Accountability Office. The GAO recently testified before the House of Representatives that hedge funds and private equity investments pose a number of risks and challenges beyond those posed by traditional investments. For example, investors in hedge funds and private equity face uncertainty about precise valuation of their investment. Hedge funds may own thinly traded assets whose valuation can be complex and subjective, making valuation difficult. Further, hedge funds and private equity funds may use considerable leverage — use of borrowed money or other techniques — which can magnify profits, but also magnify losses if the market goes against the fund’s expectations. Also, both are illiquid investments — that is, they cannot generally be redeemed on demand. Finally, investing in hedge funds can pose operational risk: risk of investment loss from inadequate or failed internal processes, people and systems, or problems with external service providers rather than an unsuccessful investment strategy. GAO-10-915T (July 20, 2010).
The Board apparently is convinced that the pension can avoid all the significant pitfalls detailed by the objective, well-respected GAO. The Board should be. The pension has paid numerous investment, legal and consulting firms handsomely (from fund assets) for conflicted advice to support the hedge fund plunge. These conflicted firms should be held accountable to the taxpayers and participants when this doomed bet fails. However, the damage will likely exceed their collective net worth.
Finally, the decision to allow an investment staff with undisclosed personal holdings in alternative investments to oversee this risky scheme is irresponsible. Basic fiduciary principles require disclosure wherever staff personal investing may pose the risk of harm to the fund. It would be a simple matter to compel disclosure by investment staff and eliminate the potential for harm. Apparently, Board understanding of fiduciary principles is apparently sorely lacking.
As a leading expert in investment management personal trading, who has testified before Congress on personal trading abuses, it is my objective (gratis) opinion that investment staff should be compelled to fully disclose all their personal holdings, including alternative investments in order to protect taxpayers and participants in the fund. I have the Boardto provide, pursuant to Chapter 119 of Florida Statutes, all records related to alternative investments held by investment staff.

In summary, Warren Buffett, GAO and I, all objective experts of some stature, are of the opinion that the alternative investment gamble the Board has approved for the $130 billion state pension fund, to be implemented by investment staff with undisclosed personal investment holdings in alternative investments, is wrong – dead wrong. Indeed, the “smart money” is betting against the fund.

Florida State Pension To Transfer Wealth to Hedge Fund and Private Equity Billionaires

You can thank Ash Williams, head of the SBA which manages the FRS pension fund for the transfer of 6% of the money to hedge funds. This was done with the approval of the three trustees: Crist, Sink and McCollum.

The FRS pojects a return of 7.75% in order to maintain solvency. If 7.75% return is not earned, either benefits have to be cut or contributions have to be raised (or both). Hedge funds charge 2% in annual fees + 20% of the top of earnings. Even if the hedge fund losses money it still takes in 2% in annual fees. The bottom line is that these hedge funds have to earn about 11% annually in order for the FRS to get the 7.75% it needs. Ain't going to happen folks, it's a sucker bet and we are the suckers. But Ash Williams will have a well paying job from his hedge fund buddies after Gov. Scott fires him. Here's another story on how much these hedge fund managers collect in fees leaving the crumbs for the suckers, I mean investors:

http://www.cnbc.com/id/41316683

"KNOCK' "KNOCK" Hello PBA...Hi you can wake up now. Maybe somebody could look into this or do we have to call the IAFF.

Thanks again.

The PBA won't help. This has to be looked at by the US attorney generals office. Time to lock up more FL politicians !

BROWARD PBA

ZZZZZZzzzzoooo....What, What, where am I ...No I'm not sleeping. Whats the problem.?
Steal our money what money...? PBA money...? FRS whats that...? Oh well I'm in the Pompano plan,yea so. Well if we are going to look into this stuff we have to up the membership dues.