More than $6 billion in investment management fees paid by public pension systems could be saved each year by having the bulk of portfolios indexed, argue authors of a study by the Maryland Tax Education Foundation, Chevy Chase, and the Maryland Public Policy Institute, Rockville.
Indexing would be a safer, more responsible use of system resources than paying Wall Street management firms millions of dollars each year to deliver subpar results on public stocks and bonds and risky private alternative investments, wrote foundation Chairman Jeff Hooke and institute fellow Michael Tasselmyer. The groups, which identify themselves as non-partisan, non-profit educational associations, have been active proponents of limited government and tighter control over state tax policy.
The study takes particular aim at the $36.3 billion Maryland State Retirement & Pension System, Baltimore, for $221 million in manager fees paid in 2011, more than was paid by 45 other state systems, according to an analysis of all 50 states' annual financial reports.
Officials with the Maryland pension fund and the Maryland treasurer's office declined to comment.