We have an op-ed just published at Bloomberg, “How Your Pension Fund Became a Casino.” The article discusses changes to ERISA, the law that governs how retirement investments passed 40 years ago to professionalize the management of pension funds. Unfortunately, the Labor Department, which administers the law, reinterpreted some of its provisions in 1978 in responses to pressure from the financial services industry to allow pension funds to take greater risks. The piece explains how naive adoption of newer principles of investment, particularly modern portfolio theory, has blinded pension trustees to risks of entire types of complex investment, such as subprime securitizations and private equity, leading to losses and oversight failures.
I hope you’ll go read it pronto. I also wanted to thank the Bloomberg editor, Mark Whitehouse, who was a pleasure to work with. His revisions made the article much more accessible.
Hope you enjoy it!