The recent annual returns achieved by the S.C. Retirement System Investment Commission need to be put into perspective. From June 2012 to June 2013, the S&P 500 Index rose by about 20 percent. If the Investment Commission had placed only the $25 billion it had at the start of fiscal year 2013, it would have earned $5 billion.
Instead, its investment income was $3 billion, and this includes returns on added funds from contributors and taxpayers. The gain posted by the pension fund was comprised almost entirely by contributions from taxpayers and members. Almost all investment income went to pay benefits.
A group of finance graduates from universities around the state could have done as well with index funds, and would have charged a lot less. As a state retiree, I am petrified at the risk profile the commission has assumed to achieve its high-cost results. It has invested in illiquid private equities, opaque structured products and who knows what else.
How will the portfolio of high-risk investments perform when the Federal Reserve Bank stops inflating stock prices and we have a bear market?
We will never know, because there is no time allotted by the Investment Commission for questions from the public (let alone retirees) at any of its meetings, many of which include large blocks of time in needless executive sessions.
John A. Huffman