DeSantis's Scary Clownish Pension Grab

Lacking any investment experience or credentials, DeSantis's clownish proposal to gamble $5 trillion in state pensions to further his political ambitions would be funny--if it weren't so scary.

Florida's Governor wants to steer $5 trillion in state workers' retirement savings into investments to further his political ambitions. If his gamble fails, pension stakeholders—including taxpayers—will foot the enormous bill.

With a reported net worth of approximately $300,000, Florida Governor Ron DeSantis has virtually no experience managing money, personally or professionally. He utterly lacks any investment credentials, or investment performance track record. Yet DeSantis wants you to believe he is compenent to dictate how $5 trillion in our nation’s 5,000 public sector retirement systems established to provide retirement security for over 23 million active government workers and retirees should be invested. Not suprising, DeSantis’s state pension proposal is crafted to further his lofty political ambitions and has nothing to do with prudent investing. Are pension stakeholders—including government workers and retirees, as well as taxpayers—willing to let DeSantis endanger these already severely underfunded retirement plans?

Florida Governor Ron DeSantis recently proposed that his state pension system work with pensions in other Republican-controlled states like Texas to push back against activist-led environmental, social and governance—or ESG—initiatives at corporate shareholder meetings. With assets of nearly $5 trillion, U.S. state and local public pensions have often been a powerful force helping activists pursue ESG issues on corporate ballots but, since they are rarely the largest investors in U.S. publicly traded companies, their influence is limited.

DeSantis wants Republican-controlled state pensions to vote together as a bloc purely to make a political statement—regardless of the investment merits of such ESG proposals and whether pension stakeholders may support them.

To be sure, if DeSantis seriously wanted to improve public pension funding levels and investment performance in Florida (as well as other states), there’s plenty of hard work to be done. For openers, restore transparency at the Florida Retirement System and allow the public to see just how much mismanagement of investments, excessive fees paid to Wall Street and politically-driven investing has been costing the state for decades. The state pension’s $250 billion portfolio is chocked full of costly, underperforming investments that can only be explained by influence peddling. Further, requests for public records are routinely ignored, delayed, or denied by the state pension. DeSantis is no fan of open-government.

Further, it has long been recognized that the highly-secretive Florida Retirement System has a deeply-flawed governance structure. DeSantis is one of only three trustees who oversee the pension, the other two being restaurateur Chief Financial Officer Jimmy Patronis, and Attorney General Ashley Moody—all elected politicians lacking any pension experience. Reform of the state pension’s governance structure is long-overdue and would save taxpayers billions squandered annually in secretive investment schemes.

Whether they know it or not, as members of the pension board, DeSantis, Patronis and Moody are “fiduciaries.”

The Florida Retirement System’s website acknowledges their fiduciary duties:

“A three-member Board of Trustees governs the SBA. The three trustees are the Governor as Chair, the Chief Financial Officer, and the Attorney General. They have the legal authority and fiduciary responsibility (emphasis added) for the investments of assets under management... The Trustees, Executive Director and staff always act solely in the best interest of FRS participants and beneficiaries. At the SBA, we clearly understand that thousands of Florida's state government employees, public school teachers, local public safety officers, firefighters and retirees count on us to provide superior investment and trust services while adhering to the highest ethical, fiduciary (emphasis added) and professional standards.”

And, as fiduciaries, DeSantis and the other board members must always act solely in the best interest of pensioners—politics aside.

“What we need to do is get other like-minded states to have all our retirement systems’ voting rights used as a bloc,” DeSantis said at a July 27 news conference.

“We could be a real check against a lot of the excesses that we’ve seen and probably have enough resources to beat back a lot of this stuff.”

How does a politically-driven $5 trillion reckless gamble of millions of workers retirement savings amount to a “real check against excesses?”

Shooting from the hip—with little, if any substantive knowledge—is classic DeSantis, as well as the very definition of imprudence. There is no mention of investment considerations or fiduciary duties. This is a display of pure politics—not the prudence required of pension fiduciaries.

Whether government workers and retireees who rely upon already severely underfunded state pensions are willing to allow DeSantis to risk their retirement security remains to be seen. In the end, our nation’s taxpayers will be stuck with the bill if his heavy-handed state pension grab succeeds.