The Real Reason the Investor Class Hates Pensions
- 6 years ago
The Real Reason the Investor Class Hates Pensions
We let ourselves be charged high fees that we do not understand, we accept poor returns quarter after quarter, we never sue to enforce our rights, we never vote as shareholders
and we never tell our investment managers how we think they ought to vote.
And yet states and cities are busy converting traditional pensions into these failing
401(k)s or equivalents, to the great benefit of money managers and the finance class.
Entities like the Koch brothers’ Americans for Prosperity, the Laura
and John Arnold Foundation (John Arnold made billions at Enron), the American Legislative Exchange Council and their allies are engaged in a multifaceted, multistate campaign to gut traditional pensions like Calpers
Substantial empirical evidence shows that America’s favored retirement vehicle — the 401(k), recently renounced by its own inventors — is grossly inadequate
and will leave tens of millions of Americans with insufficient retirement assets.
When it calls up an investment manager to complain about performance, or to dump
that manager, or when it calls a lawyer to sue for fraud, that catches the attention of corporate managers, of hedge funds, of private equity funds.
They don’t want to challenge the compensation, reelection or legal judgment of the same corporate
managers from whom they hope to win the right to manage our 401(k) money in the first place.
How many of us call up our fund managers after a quarter, a year or a decade in which
we underperformed the Standard & Poor’s 500-stock index to renegotiate our fees?
We let ourselves be charged high fees that we do not understand, we accept poor returns quarter after quarter, we never sue to enforce our rights, we never vote as shareholders
and we never tell our investment managers how we think they ought to vote.
And yet states and cities are busy converting traditional pensions into these failing
401(k)s or equivalents, to the great benefit of money managers and the finance class.
Entities like the Koch brothers’ Americans for Prosperity, the Laura
and John Arnold Foundation (John Arnold made billions at Enron), the American Legislative Exchange Council and their allies are engaged in a multifaceted, multistate campaign to gut traditional pensions like Calpers
Substantial empirical evidence shows that America’s favored retirement vehicle — the 401(k), recently renounced by its own inventors — is grossly inadequate
and will leave tens of millions of Americans with insufficient retirement assets.
When it calls up an investment manager to complain about performance, or to dump
that manager, or when it calls a lawyer to sue for fraud, that catches the attention of corporate managers, of hedge funds, of private equity funds.
They don’t want to challenge the compensation, reelection or legal judgment of the same corporate
managers from whom they hope to win the right to manage our 401(k) money in the first place.
How many of us call up our fund managers after a quarter, a year or a decade in which
we underperformed the Standard & Poor’s 500-stock index to renegotiate our fees?