Millions of Americans have their retirement savings tied up in funds managed by financial novices.
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Around the world, pensions are a serious business. Canada selects directors with financial expertise to oversee its public pension funds. In the Netherlands, board members must obtain approval from the central bank.
It’s different in the US. Unpaid union-backed reps, retirees and political appointees are in charge of some big pensions that look after the nation’s retired public servants. They’re proving to be no match for a $4 trillion system that’s exploded in size and complexity.
The disparity is dragging on state and local finances and — together with headwinds that include a growing ratio of retirees to workers and lenient accounting standards — it’s gobbling up more of government budgets. Increasingly, taxpayers are being asked to step in when pensions fall short.
Bloomberg reporters Neil Weinberg, Suzanne Woolley and Akayla Gardner join this episode to take a closer look at the headwinds facing pension funds, the politics of funding and managing retirement pensions and the spillover risks these funds could pose — to financial markets, state government finances, and workers who are counting on that money to be there when they retire.
Read the story: Investing Novices Are Calling the Shots for $4 Trillion at US Pensions
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