US - New York comptroller Alan Hevesi has categorically refuted claims the New York State Pension Fund was on its way to a US$40bn hole due to equity investments.
In an article, Edmund McMahon, director of the Empire Center for New York State Policy had said that exposing the fund to more risk and volatility could result in tens of billions in deficit - even for well funded public retirement systems like the New York State Pension Fund.
McMahon suggested pension funds refrain from investing in the equity space to avoid this scenario.
In response, Hevesi accused Mc Mahon of creating this "phony hole" to make public pension funds look more expensive than they really were. "Mr McMahon wants the pension fund to earn less so he can say it has a big hole and is too expensive," he claimed.
"It is absurd to suggest that public funds invest with one arm tied behind their backs.”
The comptroller stated the fund, worth $140bn, made sound investments which posted returns of 14.6% in 2005. He claimed the consequences of pension funds not investing in equities would be four-fold: "Public pension funds have $2.5trn in assets. If they sold all their stocks, the price of those stock would fall.
“Companies would have less equity capital for economic expansion and job creation, Wall Street would lose money and tax payers would have to pay much more into the pension fund for no good reason."
Most people think it is right that savers take responsibility to protect from pension scams.
More than 100,000 savers face being landed with huge tax bills following tiny uplifts to their pension, a Freedom of Information (FOI) reply has revealed.
Alan Pickering says politicians should have the freedom to redefine what is meant by 'absolute'