Issue Position: State Pension and Retirement System

Issue Position

FACT 1: As a member of the House Pension Oversight Committee, Delegate Clarence Lam has led the way in reforms that have turned around an underperforming pension system: from a 1% return on investment in 2016 to over 8% in 2018.

​​FACT 2: Over the last 15 years, the State's managed fund has beat the S&P500 by nearly 3%, and in the last year, it outperformed the S&P500 by nearly 9% (these returns are accounting for any fund management fees).

FACT 3: Republican Senate Candidate Cites Right-Wing Think Tank's "Alternative Facts" that are Wrong:

The Republican candidate cites the Maryland Public Policy Institute (MPPI), a right-wing "think tank," which has wrongly stated that "billions of dollars" are being spent by the State Pension System for hedge fund managers. The non-partisan staff of the State Pension System has called this analysis a "work of fiction," and issued the following statement to set the record straight:

"In calendar year 2016, the most recent period for which the data is available, the [State Pension] System paid $87.4 million in private equity performance incentives, which is far less than the amount reported by MPPI."

-from Andrew Palmer, Chief Investment Officer at Maryland State Pension System, in "Think Tank's Work of Fiction."

FACT 4: Having experts manage the pension funds generates more reliable returns on investment in the long term than unmanaged investments subject to swings in market performance

The Republican candidate's position of investing the state's pension dollars in unmanaged funds means that the pension system's returns will be subject to the whims of the stock market. In weeks like early October 2018 when the stock market lost hundreds of percentage points, the pension system could face a sudden shortfall. Fund managers help diversify the investments of the pension dollars leading to overall more reliable returns, reduced concerns of shortfalls in pension payments when the stock market is underperforming, and greater long-term returns on investment.

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