Bloomberg BusinessWeek reported this week that the American Federation of Teachers is urging public pensions to review investments with Chicago-based GTCR, a private-equity firm where GOP gubernatorial candidate Bruce Rauner was chairman before stepping down in 2012. Rauner supports shifting government workers to 401(k)- type plans from traditional defined-benefit pensions, which give retirees a payout based on years of service and final salary.
The AFT, with 1.5 million members, is scheduled to release an updated “watch list” of 29 money managers that the union says support groups opposed to traditional pensions. GTCR has $4.9 billion of commitments from U.S. public pension funds, according to Preqin Ltd., a London-based research firm. The AFT is also adding Highbridge Capital Management and a unit of London-based insurer Aon Plc to the list.
“Trustees should actually know if someone who is trying to get you to invest with them are also trying to eliminate the pension system,” AFT President Randi Weingarten said in a telephone interview. “The centerpiece of Rauner’s campaign is the elimination of the defined-benefit plan.”
While only 10 percent of U.S. companies offer defined-benefit plans, more than three-quarters of state and government workers, including teachers, have them. States alone face an estimated $780 billion gap between what they promised retirees and what they’ve saved, leading Republicans and some Democrats to attack government retirement plans as too generous.
More on Bloomberg HERE.