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Funding Solution: Reduce Fees Paid to Wall Street Managers

The pension board of every pension plan should monitor how much it spends on Wall Street advice for managing its money. Ideally, pension funds should pay low fees for investing their money, and investments should aim to maximize the returns for members of the fund while carefully balancing risks.

In theory, pensions should already be doing this, but many pension boards chase big returns from high-risk, “alternative” investments that require high fees. These kind of bets can make sense sometimes, in some states, but most legislatures are not aware of the levels of risk being taken.

 

 

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