(CA) Economy Pension grapples with risk of total losses, plus billions

[unhappycamper]

http://www.utsandiego.com/news/2014/sep/04/pension-risk-san-diego-cut-losses/



Dianne Jacob, chairwoman of the San Diego County Board of Supervisors, is also a member of the board of the San Diego County Employees Retirement Association, which runs the $10 billion pension system for retired county government workers.

Pension grapples with risk of total losses, plus billions
By Dan McSwain
5 p.m.Sept. 4, 2014

San Diego County’s public pension fund is exploring alternative legal structures to eliminate the risk that catastrophic losses could wipe out its leveraged portfolio and leave taxpayers with billions of dollars in debt.

At a contentious meeting Thursday, the pension fund’s board directed managers to fence in potential losses without reducing expected investment returns.

Under a revised investment strategy that took effect July 1, managers can use derivatives to put $20 billion or more at risk in financial markets, using the fund’s $10 billion in assets as collateral.

“Frankly, it scares the heck out of me,” said Dianne Jacob, a county supervisor and appointed member of the pension board, said Thursday.

[dixiegrrrrl]

1. Scary move indeed.

"derivatives to put $20 billion or more at risk in financial markets, using the fund’s $10 billion in assets as collateral. "

It is a proven formula for blowing up funds.

But, as Carlin warned us.....they are coming for your pension and they will get it.