The state-run pension fund performed miserably over the last year, losing 19.18% of its value.  The loss amounted to $1.5 billion.  Losing 19.18% in one year is terrible, but this amount does need to be examined in context.  General Treasurer Frank Caprio points out that Rhode Island's fund turned in a better year than California (24%), Harvard' endowment (at least 24%), and the S&P 500 (26.22%). 

     If you look at Frank Caprio's numbers, Rhode Island didn't fare too badly.  Of course, he selected certain funds.  What would be interesting is a comparison of Rhode Island's performance in comparison to all states who release their fund's returns.  That would provide a true indicator of Caprio's performance over the last year.

     In response to those numbers, former Cranston mayor Steve Laffey had this to say: 


"It seems that only the General Treasurer is happy about losing billions of dollars of hard-working pensioner’s assets over the last couple of years. … This is unconscionable … Rhode Island, under Frank Caprio, has the worst-funded state pension system in the United States of America.”

“I have said many times that the only way to save the pension system is to end it and give everyone their money and go to a 401(k) plan ... like the people in the private sector.”


     Again, before I pass judgment on the performance of the fund, it's tough to make comparisons without seeing how other states fared.  Of course, the fund could have invested all of it's money in treasury bills and government bonds.  This would have greatly increased the likelihood of capital preservation, but then it likely wouldn't have earned enough of a return in good times, which also would have raised criticism.  The state's asset allocation seems appropriate, but the market has been difficult. 

     I disagree with Steve Laffey's analysis on this point, but it would certainly resonate with voters if he decides to run.  Accuse the other guy of "losing" $1.5 billion, and people will pay attention.  It isn't the best line of attack, but I could see it being used.  What does make sense is Laffey's idea about giving employees their contributions to invest in a 401k.  This wouldn't be an option for everyone, but it is an option that should be considered for the majority of employees in the pension system.