Wednesday, April 6, 2016

CalPERS lost $3 billion selling tobacco stocks at all-time lows; now wants to buy them back at all-time highs

Pensions & Investments:
CalPERS has missed out on as much as $3 billion in investment gains since the nation's largest defined benefit plan shed its tobacco holdings, as that industry powered ahead, a recent report from its consultant states.

That has the California Public Employees' Retirement System weighing whether to take up the habit again. Members of its investment committee on April 18 are expected to consider a plan that could allow the $291.2 billion system to reinvest in tobacco company stocks and other sectors that had been culled from its portfolio.
These are the guys whose investment mistakes create open-ended liabilities for cities like Encinitas. And our local leadership has done nothing to rein in pension costs since the Jerome Stocks council did a partial rollback of the 2005 giveaway. Meanwhile, annual pension costs are rising by double digits every year and it's still not enough to keep up with promised benefits.

CalPERS was already severely underfunded before it missed its investment targets last year. It's shaping up to report yet another horrific performance for the current fiscal year ending in June, meaning even more rapidly rising annual costs to the city of Encinitas to keep the employees in six-figure early retirement.

31 comments:

  1. Encinitas is the target for the public sector to exploit with the excessive and unsustainable pensions. The underfunded pension costs now exceed $30 million - there may the day when taxes pay for nothing other than pensions. We need a City Council that will overhaul it; better yet, another Proposition 13, aimed at public employee pension payments. There has to be a limit to this monetary hemorrhaging, before the city is in dire financial peril.

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  2. there may be the day....

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    1. As long as blubber Muir is on the council, pension reform will never be an issue. T

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    2. 7:37 PM Absolutely true. Muir needs to be dumped.

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  3. And 50 million in road repairs are ignored as well. Good reason for spending on a spiffy life guard tower.

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    1. Don't forget the cost of living to Muir's $180K/year pension. Dude has to keep up with the Jonees. Pension deficit -$30 million and rising!

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  4. So did the social justice nazi's brown shirt bully the Calpers trustees to sell the tobacco stocks at all time lows?

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  5. No worries everyone, our mayor just gave her state of the city address and we are in good financial shape. All of our council members are on board with this same rationalization.

    Rational, not much. We are in such good shape that they are going behind our community's back and selling out our pub;lic treasures without our input.

    I fear that bankruptcy might become our only solution to change the status quo and start over. There has to be a better way to govern than what we have been dealt.

    Just how much good does belonging to SANDAG actually do us?

    NCTD, I suppose we are stuck with them. The hope for trenching and/or covering like Solana Beach and Carlsbad in the future leaves us with nada.

    The pigs are at the trough and we pay and pay and get nada. Tokens are given here and there, but something substantial, we have yet to see.

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    1. I think the courts ruled that pensions can't be modified or restructured in a bankruptcy - Encinitas will become a perpetual prioritized bankroll for the fat cat pensioners that profited off their employment with this municipality.

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  6. If someone ran on a "pull out of SANDAG" campaign I'd be first in line to volunteer to get them elected.

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    1. I'd be right behind you...

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  7. When CalPERS made the decision to divest its tobacco holdings it wasn't a moral high ground decision. It was a bet fearing that continuing litigation would hurt tobacco stocks. They lost that bet. Like a losing gambler they now want to double down on a bad decision and buy high after selling low. Good grief.

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    1. Reinvest in liquor - then open more bars in
      Encinitas.

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    2. Tobacco does cost us money as a society, no question. That said, CALPERS has a history of bad investment decisions.

      Good luck getting pension reform in Encinitas. Not with guys like Muir and all the cops and FF always supporting a candidate.

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  8. The city needs to declare bankruptcy, fire all staff and revert to county control.

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  9. no wonder they want to sell everything that can be named, their retirement must be funded at any cost.

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  10. Maybe they should invest in medical marijuana instead. Would certainly make us Leucadians happy!

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    1. Works for Colorado!

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  11. I didn't know about the montly full moon pot smoking party on Moonlight Beach every month. Some old hag complained tot he city, now they limit it to 20 people. Doesn't that violate the freedom to congregate? Those without medical licenses can declare it their religion - call it a revival!

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  12. 5:35- You make an excellent point. I think all of us with cards should go to the next full moon party and if the sheriff tries to arrest us, let them. We can then take out case to court. Of course, we need an attorney that won't charge us an arm and a leg, so that leaves Marco out:)

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    1. Smoking is illegal in the beach.

      Doesn't matter what you are smoking.

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    2. How about eating, such as edibles? Is that also illegal. That's B.S. anyway. I intend to smoke whatever I want at the beach, and if the cops want to arrest me for smoking, no problem. What a fun time someone could have with that. We are experiencing a lot of break ins in our area, and they are going to worry about a few people smoking on the beach at night? That would be just plain stupid and funny. Maybe they had better stand by the railroad tracks 24/7 and ticket everyone who crosses illegally.

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    3. 9:19- And, at least it would not be tobacco, which is what this post started out to be.

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    4. When I get elected benevolent dictator, there will be drone strikes targeting beach smokers.

      Puff. Puff. Ker-BLAM-o. Case closed.

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    5. Benevolent†



      † from the perspective of law-abiding citizens and nature critters only

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  13. Lets talk about fat pensions killing our City. Muir get $185k per year forever. Five years equals $925k.... The City could do alot of needed projects if it wasn't for Muirs Pension.

    Muir is killing our City.

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    1. Amongst about 15 others (and growing). This is akin to looting the Treasury, but will go on until an initiative is put on the ballot to moderate this abuse. When the people representing the people (city council) are apathetic (or supportive) to this travesty, it will continue.

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    2. And Muir spun in a swiveling chair for 15 years eating donuts - and that "contribution" is now worth a million every 5 years - absolutely outrageous. Watch for the upcoming election hype coming from this guy - "tried and tested". The only thing he tried and tested was Yum Yum.

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    3. I worked in a professional research position for the UC system for 30 years - my penbsion is $20K/year. I worked for the wrong outfit.

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  14. Calipers needs to invest in wacky tabbacy!

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