pensions

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John Arnold: The Most Hated Man in Pensionland

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The billionaire philanthropist has vowed to secure retirement for public employees. So why do so many public employees despise him?
BY  | APRIL 2017
(Photos by Brent Humphreys)

John Arnold wasn’t a pension guy.

The billionaire financier, who made a fortune in the stock market before retiring at 38, hadn’t ever really been interested in public retirement plans. But in early 2009, just months into the global financial crisis, Arnold began seeing a flurry of news articles about public pension funds collectively losing billions in the stock market crash. Assets had plummeted, causing unfunded liabilities to shoot up. Cash-strapped governments couldn’t afford to fix the shortfall, and the longer they delayed putting more money in their pensions, the worse the problem would get. In short, it was a policy nightmare.

Arnold became intrigued. “The fact that you could go in one year from having a system that was well-funded to having a major gap -- that affected me,” he says. He started digging and found a book called Plunder: How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation, by conservative writer Steven Greenhut. As the title suggests, the book is an anti-union take on public pensions that details the misdeeds of the system’s bad actors -- public employees who game the system and wind up with pensions that are equal to or better than what their working salaries had been. Reading that book, says the now-43-year-old Arnold, “just made me mad.”

The China Factor in America's State and Local Economies

As the world's second-largest economy falters, pensions and tax revenues here are feeling the pinch.

BY  | AUGUST 2016

Earlier this summer, New York state’s pension fund announced a mediocre year. Investment earnings were essentially flat, and as a result the fund lost $5 billion because its other receipts -- contributions from government and from current employees -- didn’t cover retiree payouts.

The New York pension system was the victim of a global event that began halfway across the world a year ago this month. In August 2015, the world’s second-largest economy officially began to stumble. China’s central bank stunned investors by devaluing the yuan, lending credence to what outsiders had long been suspecting: China’s years of astounding annual economic growth -- at times cresting at double digits -- was slowing down.

Is Kurt Summers the Future of Chicago Politics?

The city’s young treasurer has turned a moribund office into a hive of activity, fueling speculation that he has higher aspirations.
BY  | JULY 2016

On a cool late-spring evening in the Wild 100s of Chicago, an area on the far South Side known for its gang wars, Kurt Summers Jr. is addressing a small crowd gathered inside a once-gleaming 1920s retail building. There used to be a beauty school here; later the building housed a counseling service and a check cashing store. But even those businesses are gone. This community, built by middle- and working-class Dutch families 15 miles from downtown, never recovered from the closing of the South Chicago steel plants in the 1970s and 1980s. Today, it’s a symbol of violent crime and urban decay.

But to Summers, who grew up on the South Side, violence is only a symptom of the community’s real dilemma. “We don’t have a violence problem in Chicago, we have an economic problem in Chicago,” he tells the crowd of about two dozen residents, who applaud in agreement.

Alabama’s One-Man Pension Show

He’s not the governor. He’s not a lawmaker. But thanks to the way he runs his state’s pension plans, David Bronner may be the most powerful man in Alabama.
BY ,  | MAY 2016

The office suite of David Bronner, head of the Retirement Systems of Alabama (RSA), rivals those of governors in much bigger and much richer states. Perched on the top corner of a building completed in 2008, Bronner’s spacious office is full of the framed photos, cartoons and assorted knick-knacks indicative of a long career in politics. A large rug in front of his desk prominently displays RSA’s circular logo. Bronner’s real trophy case, though, can be seen through his floor-to-ceiling windows and adjoining balcony: the panoramic view of downtown Montgomery, which shows just how much he has changed the skyline of this city of 200,000 people. Five mammoth concrete-and-glass buildings, much like the one his office occupies, stand nearby. The green-capped buildings are designed primarily to house state agencies, yet they’re outfitted with flourishes fit for big-city law firms, from fountains, marble, granite and towering lobbies to polished metal cauldrons at major entrances. Beyond them stands the city convention center and the adjoining hotel that Bronner also oversees.

As Retirees Outnumber Employees, Pensions Seek Saviors

Desperate for more money, public pension systems have been making high-risk investments hoping for a higher profit. But they may ultimately cost taxpayers more.
BY  | OCTOBER 2015

The $300 billion California Public Employees’ Retirement System began showing its age this year: It started paying out more money to retirees than it gained in contributions and investments. In roughly 20 years, CalPERS’ retirees will outnumber active workers by a ratio of nearly 2-to-1 in some of its plans.

In fact, a lot of state and local pension systems are already showing their age. Back in the 1970s, the typical pension fund had four to five times more active employees than it had retirees. Today, that ratio has slipped to 1.5-to-1 and is falling.

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