SOARING FEES, SUB-STANDARD RETURNS … S.C. TREASURER VINDICATED
For years, this website has been all over the S.C. Retirement System Investment Commission (SCRSIC) … a.k.a. the Palmetto State’s atrociously mismanaged pension fund for government employees.
Well to be fair, S.C. treasurer Curtis Loftis has been all over this corrupt bureaucracy … we’ve merely followed his lead.
According to Loftis, this fund’s self-serving managers have left more than $7 billion on the table by pursuing a controversial “alternative investment” portfolio. Meanwhile they have consistently doled out massive bonuses to the very bureaucrats who have labored to produce some of the worst results of any large pension fund in America (at the highest price, too).
Loftis has exposed all this … repeatedly … and been attacked by the status quo fund managers for his efforts.
Now he’s being vindicated … again.
The latest evidence of the SCRSIC’s abysmal performance? A state audit released this week (.pdf summary here) which classified the state’s pension fund as “significantly underfunded” despite a massive ramp-up in fees over the past decade.
“From 2005 to 2014, fees increased from $22.4 million to $467 million (annually),” the audit concluded.
Despite this huge uptick in fees, the fund has continued to lag behind its large pension fund peers – posting a ten year return of only 5.21 percent and a one-year return of 1.73 percent. The national averages for those time periods were 6.91 percent and 3.11 percent, respectively.
Things are likely to get even more “underfunded” in the near future, too.
“Severe downturns in the investment markets could cause the already low-funded status of the pensions to decline to significantly lower levels,” auditors concluded.
In other words the S.C. General Assembly’s assumed rate of return for the fund’s investments – 7.5 percent – is nothing but a pipe dream.
Loftis said his office has been “working hard to raise returns by lowering fees, properly stating risk and implementing meaningful transparency and accountability.” He hasn’t had much help, though.
“My quest for pension reform has been a lonely one,” Loftis said in a statement responding to the report. “Four years ago I foresaw our system’s current crisis and began stepping out and speaking to the issue. Since then, I have been publicly censored by the Investment Commission, hauled before Senate Committees, dragged before the Supreme Court and have fought several attempts by the Senate to have me removed from the very system I was protecting.”
He’s not kidding …