Retirees' best interests only focus, says director
JOE DEAR puts you and your retirement interests first.
Joe Dear
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As executive director of The Washington State Investment Board, his task is to work for the exclusive benefit of the state pension plans and the retirees who belong to them.
“The board is working only in the interests of the beneficiaries,” Dear told the Local Presidents’ Conference in October.
As a result, he says, all his fund decisions are taken with your interests and those of your fellow workers in mind. If he believes an action will benefit your pension plan, he will approve it. If he believes it will not, he will decline it.
So far, when it comes to ensuring solid growth for the pension fund, he and his staff appear to have served those interests well.
Over the last 10 years, the fund has returned an average 9.6 percent a year. That’s a lot more than the return your money would have earned in a bank savings account or even a certificate of deposit. It also exceeds the target growth of 8 percent a year that the legislature has set for the Board to meet pension fund objectives.
The record is even more impressive when you remember that the last 10 years included some of the worst years for decades in stock market history.
“There are a lot of things to worry about in this world,” Dear told the Local presidents, “but you don’t have to worry about the economic security of your Washington State pension.”
But sometimes other issues intervene.
From time to time, Dear told the presidents, advocates for a variety of causes might suggest that the state should invest in a certain way. For example, some might urge the board not to buy stock in Wal-Mart because of its labor practices or to withdraw money from companies that conduct business in the Sudan (where the government and its supporters are accused of war crimes and ethnic cleansing).
In such cases, Dear reminds them of his major task — the interests of the pension fund beneficiaries.
“It is all well and good when these people take a position that you agree with, but people might make suggestions that are not in the interests of trade union members,” Dear says.
“The board has a clear and single focus. We cannot accede to pressure from some people to use pension fund money to influence social and political change if that deters a pension fund’s ability to focus on members’ interests.”
Of course, Dear says, should a company be breaking the law or promoting terrorism the government would be unlikely to allow that company to operate. But in most cases the investment board puts the interests of members ahead of social objectives.
“We have met our return objectives, making the cost of pensions to public employers as low as possible,” Dear adds. “If we had restrictions on what we could and could not do, our costs would go up and that would mean shortfalls in state and local government budgets.”
The $70 billion in assets in 36 funds that Dear oversees includes all of the assets in PERS I and PERS II and parts of PERS III, which is a self-directed fund and therefore allows investors to make their own decisions in the way in which they want to invest their money.
Dear and his staff manage all the fixed-income investments, including bonds and the money market, themselves.
Money managers selected by the board handle the other investments in such fields as U.S. stocks, international stocks, real estate and private equity. |
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