They set it up that way

A New York politician got caught messing with the state pension fund. Here is how it affects you. No matter where you live and work. And even if you are on Social Security.

Alan Hevesi was the New York Comptroller. He was in charge of the pension fund for state employees. He took big money and gifts from money managers.  And from their agents.  Bribes.  If he asked them to give, it is called extortion. 

The managers wanted to manage some of the pension fund’s investments. He took their money and gifts. Then he directed at least $5 billion to them. (That we know of.) They got to manage those billions. They took their normal fees for the management, oh boy.

Now, why do you suppose only one guy was in charge of this pension fund? The fund is worth over $125 billion. Gee whilikers, that seems like a lot of money to let just one guy control.

Politicians set it up that way. So they could use those billions to lure gifts. Like this crook did. They have used the fund in the past to reward cronies. A few years ago they funneled many millions into “economic projects” around the state. They let their cronies select the projects. You don’t suppose the cronies were rewarding supporters. By selecting their projects for the money.  Perish the thought.



Here is how the world of pension investing works. Pension funds attract billions of dollars. The piles of money draw politicians like manure draws horseflies. Simple as that. The politicians then use the money to help their careers. Or their bank accounts.

Let’s say your firm manages investments. If it wants to manage state pension funds it pays to play. The politicians find ways to make you pay.  When you pay, they select you to manage the investments.

If your firm wants to manage union pension funds, same deal. You may have to pay bribes to union guys. You may have to give jobs to union members. I knew one such guy.  He worked as a consultant for a money management firm. He could not even spell those words. He knew as much about the subject as I do about brain surgery. I suspect he funneled some of his salary back to his union bosses. That is the way life works.

The biggest pension fund in the world is your Social Security system. The horsefly politicians raided that decades ago. Took your money. Spent it. Left behind IOUs. That you have to repay with more tax dollars. Brilliant scheme.

We could easily end such chicanery. We could turn all pension funds into 401(k) plans. Including our Social Security fund. There would be no fund accumulating billions. And attracting the flies.  Instead, everybody would have their own accounts.

Now, you might say “Tom, that would put everybody’s retirement at risk, with those Wall Street wolves. And dumb people would destroy their accounts with stupid investing.”

If you say that, I suggest you have drunk the politicians’ lemonade. First, your return on 401(k) money over the years would be far higher than the return on your Social Security money.  No matter what has happened to markets.

Second, a few simple regulations would keep dummies from shooting themselves in the foot: You can only invest in these approved funds. No more than 5 percent in any one fund. No more than X percent in stocks at given ages. You can withdraw only in monthly amounts, not in a lump sum.

Regulations like that are all you would need. For all the pension funds in the country.  And we would not need a big government department to mess with it. There is no 401(k) department now in Washington.  Ah, but if we did this, it would give you control over your money.  You.  Not them. And politicians would never allow that.

From Tom ... as in Morgan.                  

For more columns, for Tom’s radio shows and new TV show (and to write to Tom): tomasinmorgan.com.

Today's Other Stories



© 2014 Snyder Communications/The Evening Sun
29 Lackawanna Avenue, Norwich, NY 13815 - (607) 334-3276
We're on Facebook