State lawmakers are calling for more transparency in how the state’s largest pension fund invests its money into secretive hedge funds and private equity.
Pension Oversight Committee co-chair Sen. Joe Bowen, a Republican from Owensboro, pressed KRS’ investment officer David Peden over the lack of transparency of its investments, saying, " If statute required it, this would have to become transparent. So using that scenario are you saying to us that these current consultants, managers that we got would go away?"
Peden responded, " Maybe not the current ones. They may not like it, but I don’t think they’re going to tell us to go away."
Peden revealed that, in 2013, private money managers who handle the investments earned over $46 million. But he refused to reveal the nature of the investments, or who the money managers are, saying only that transparency would prevent KRS from hiring the best money managers available.
Despite claims that its investments are on target, KRS and its cousin, the Kentucky Teachers Retirement System, face a current combined liability of about $30 billion.
Co-chair Rep. Brent Yonts says he’s not thinking about raising taxes to cover the mounting costs, " I’m not going to get into raising taxes. Not to fund a pension system right now anyway. We may put some offering boxes out here [Laughs].”
The state recently avoided a downgrading of its credit rating from Moody’s Investors over the pension system, but eventually, the piper will have to be paid.