State Workers Right to Question Why Pensions Expected to Lose More Than $51 Mln
Senator Joseph Pennacchio, Republican of District 26, said this after he read that the state pension system may lose $51 million or more on a risky investment in Lehman Brothers Holdings, a now–bankrupt Wall Street investment bank:
“A news report in the Star-Ledger last week suggested a $178 million investment was made in part because New Jersey was trying to persuade Lehman to keep its New Jersey offices open.
“This is an accusation that state pension officials must answer publicly and with total candor. Our pension fund deficit is estimated at a staggering $29 billion and growing. That’s nearly the size of the entire state budget. We can not afford to use pension funds for any other purpose but to secure the retirement of deserving teachers, police officers and other government employees. If we start using these funds for political purposes, workers may not get the pensions they deserve or taxes may have to rise to cover unnecessary investment losses.
“If the intent of the Lehman investment was to prevent workers in the state from losing their jobs, that effort looks like a spectacular failure. Despite the pension investment and state promises of $20 million in grants, Lehman is expected to lay off thousands of workers all over the world.
“I have sent a letter to Investment Council Chairman Orin Kramer and William Clark, the director of the state Division of Investment, asking them to explain how the decision was made to invest $178 million in Lehman at a time when the teetering bank’s pleas for cash were being rejected by one savvy investor after another.
“The New York Times reported Lehman execs were flying around the world begging for capital before they turned to the state of New Jersey for help. Pensioners need reassurance that desperate Lehman execs didn’t paint a false picture of the bank’s prospects. If so, New Jersey needs to act now to stake a legal claim to remaining Lehman assets.
“The letter also asks for information that will help determine if state investment professionals, members of the Investment Council or officials in the Corzine administration had overly cozy relationships with Lehman executives or financial advisers that clouded their judgment about this investment.
“State pension funds must take moderate and reasonable risks to ensure that adequate funds are available to finance the future retirement of government employees at the lowest possible expense to the taxpayer. However, the Lehman investment sounds reckless. State officials should and must explain why they thought making such a risky wager was a good idea.”
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Similar Posts:
- Pennacchio Asks Corzine for Explanation of Lehman Investment
October 2, 2008 - Pennacchio: Lehman Brothers Execs May Get Bonuses Before New Jersey Workers Get Answers
October 29, 2008 - Pennacchio: Use Hearing to Get Answers on Lehman From Corzine Pension Officials
November 20, 2008 - Pennacchio Asks When New Jersey Will Join Other Pension Funds Suing Lehman
November 17, 2008 - Pennacchio Calls Corzine’s Opposition to Pension Hearings Short-Sighted
November 6, 2008
