Pensions

Six Ways Wall Street Billionaires Are Attacking Your Pension

 

  1. Funding Anti-Worker and Anti-Pension Think Tanks. Powerful billionaires like former Enron trader John Arnold and Paul Singer of Elliott Management run the Arnold Foundation and the Manhattan Institute, respectively. The anti-worker American Enterprise Institute is headed by Daniel D’Aniello of the Carlyle Group. The co-founder of Blackstone, Pete Peterson, spent his life attacking Social Security and Medicare.

  2. Extracting Huge Fees.  Many of the same billionaires and firms funding anti-pension and anti-worker research get substantial fees from public pension funds. Public pension funds pay out $10 billion annually in fees to Wall Street.

  3. Subpar Performance. According to Yahoo! Finance, Wall Street mismanagement has cost our pensions $600 billion in the last ten years. Had the same pension funds just invested in index funds, they would still have that money in the bank.

  4. Changing accounting rules. The anti-worker think tanks and organizations like ALEC have pushed and are pushing aggressive changes to accounting rules to make our pensions seem worse off than they actually are. This includes lowering the assumed rates of return and changing mortality tables which increase the long-term obligations of the pension .

  5. Funding anti-worker politicians. In this cycle alone, the head of Blackstone, Stephen Schwarzman, has donated $7.25 million to keep anti-worker Republicans in control of Congress. Blackstone would not exist without public pension investors paying their huge fees and tolerating their low transparency and high risk.

  6. Moving workers into 401(k)-style plans. Anti-pension advocates have been insistent on attempting to move workers into 401(k)-style plans, despite the fact that they are less cost-effective than traditional defined-benefit pensions and provide nowhere close to a secure retirement.

 

How are we fighting back?

CWA has been at the forefront of efforts to protect public pensions. In New Jersey, CWA was instrumental in getting pro-pension New Jersey Governor Phil Murphy elected. CWA mobilized thousands of members to make phone calls, knock on doors, and vote for Murphy. Murphy responded to CWA’s work by

 

One of his Murphy’s first actions as Governor was to reverse dangerous anti-pension accounting moves by Chris Christie as he was leaving office.

 

In March 2018, New Jersey’s pension stopped making new commitments to high risk, high fee private equity and hedge fund firms. That came after CWA New Jersey Director Hetty Rosenstein had led a multifaceted campaign putting pressure on the pension to improvce its fiduciary governance, cut fees, and reduce allocations to high-risk vehicles.

 

In Texas, CWA’s 11,000-member Texas State Employees Union, Texas’ largest state workers union, has led a campaign to stop the Texas Employees Retirement System and Texas Teachers Retirement System to change their accounting rules to make the pension funds appear worse funded than they are. In both cases, TSEU has successfully mobilized members to defend their pension before the boards. In the case of the Employees Retirement System, TSEU was able to pressure the Board into a compromise that limited the reduction of the assumed rate of return to 7.5%, as opposed to 7% as originally proposed.

 

Resources:

 

The Truth About John Arnold

 

The Real Threat to Pensions? Wall Street

 

David Sirota's Investigations Into Christie

 

If you’re facing a threat to your pension, have your local president or staff rep contact CWA Public Sector Researcher Matthew Cunningham-Cook at mcunninghamcook@cwa-union.org or (202) 434-1161.