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Public Pensions for Sale

Wall Street gets rich while public servants lose their life savings.

A Giant Pile of Money

How Wall Street drove public pensions into crisis and pocketed billions in fees.

How a gang of hedge funders strip-mined Kentucky's public pensions.

Illinois Gov. Bruce Rauner, sworn foe of pensions, made a fortune charging high fees to public pensions.

Public pensions in the United States manage $4 trillion in assets.
Public pensions across the country now squander tens of billions of dollars each year on hedge funds and other risky, often poor-performing alternative investments.
Pension pay-to-play scandals have swept up former Illinois Gov. Rod Blagojevich, former New York comptroller Alan Hevesi, and other political figures.
As Kentucky invested more heavily in high-fee alternatives, its performance lagged. Had Kentucky Retirement Systems’ investments kept pace with the median public pension fund from 2009 to 2014, it would have earned an additional $1.75 billion.
Meanwhile, its fees have gone up. In 2009, the year Kentucky Retirement System began investing in hedge funds, it paid $13.6 million in annual management fees. In 2014 that figure had increased to $126 million.
The governor of Illinois, Bruce Rauner, has been a leading champion of the idea that public pensions are in crisis, saying Illinois pensions were in an economic “death spiral.”
Yet public pensions have been very good to Rauner. He once estimated that pensions accounted for half to two-thirds of the money he and his partners had raised at their private equity firm, GTCR.