In a frenzied bid for higher profits in the decade following the 2008 financial crisis, Wall Street pension fund managers have siphoned as much as $624 billion from Americans’ retirement savings — and, as a direct result, taxpayer coffers — through a vicious combination of high fees and foolish investment strategies, according to an analysispublished Thursday by Yahoo Finance.
The steepest costs to taxpayers have stemmed from Wall Street pension managers’ commitment to so-called alternative funds, which invest in private equity and hedge funds rather than traditional stocks and bonds.
“The total amount pension funds could have saved by simply investing in index funds could be more than $1 trillion,” notes Yahoo Finance reporter Dion Rabouin. “Because pensions are guaranteed, the underperformance has hit taxpayers in the form of budget cuts for schools, hospitals, and libraries and decreased spending on infrastructure, healthcare, and other public projects.”
Responding to Yahoo’s analysis in a series of tweets on Thursday, Capital & Main journalist David Sirota observed that in five years of reporting on Wall Street’s investment tactics, he has found that “most people (including policymakers) still have no idea that skimming fees off public employees’ retirement savings has become one of the largest sources of profits for Wall Street moguls.