Private Consultants Rake In Public Pension Fund Fees

The woes of public pension funds have generally been placed squarely at the feet of public employees, who are often accused of having bloated pension packages that are neither realistic in today's economy nor fiscally sustainable. But much of the damage to pension fund account balances occurred as a result of losses incurred during the collapse of the bubble in 2008 to 2009.

Who has been responsible for fund performance? A recent article in The New York Times shed some light on the huge amounts of money that public pension funds pay each year to Wall Street firms for the service of managing their assets.

But external management fees are only part of the expenses that pension funds pay to private companies. Most funds also retain "investment consultants" who advise them on how to allocate their assets. The fees paid to these consultants in many cases are equal to a sizable portion of the amount of money that pension funds pay to their own employees.

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