Part 2 of 2 on just how completely broken the City’s pension system has become.
Trustees of Chicago’s failing public pension funds have funneled hundreds of millions of dollars into highly speculative investments that not only have failed to realize outsize returns but also saddled them with underperforming, long-term assets that can’t be sold off, a Tribune investigation has found.
The investments, which involved buying equity stakes in businesses ranging from fast-food franchises in Mississippi to a Los Angeles grocery chain, were supposed to plug huge holes in pension fund coffers by yielding gains of up to 20 percent a year.
But a Tribune analysis of nearly 130 private equity and real estate investments made by four pension funds since 2000 found that nearly half have lost value so far. Of the $1.3 billion invested to date, the pension funds have seen just $60 million in added value on their balance sheets.
Had the funds used an equal amount to buy and hold a 30-year U.S. Treasury bond offered in 2000, they would have received $893 million in interest payments to date — and their principal investments would be secure.
Sweetheart back-room deals for friends of the Mayor and friends of Aldermen. But the city worker and the taxpayer are getting taken for a ride.
My question is where is Lisa Madigan on this? Where is Mr. Fitzgerald on this? Where is the union leadership who is pushing out the ranks to keep voting for these numb-skulls who did this to their membership? Is no one going to take any responsibility for this?
These deals must end, period. All pension investments must be made fully public by people with experience in money management.
As a simple start, I believe we need help from Springfield to pass pension reform legislation so that every public pension fund must be fully transparent with every investment. That would solve half of the problems immediately.