Saturday, July 2, 2011
RSA sued for investment practices
MONTGOMERY, Al- Tonya Denson--an employee at the Department of Industrial Relations and Venius Turner--a nursing instructor at Jeff State Community College are the plaintiffs in the class action suit filed against the Retirement Systems of Alabama (RSA). They're criticizing RSA investments in Alabama golf courses, office buildings, condos, hotels, and resorts, claiming they don't follow the retirement system's mission statement of responsible investing.
"They've dug a hole for the participants, they've dug a hole for the plan in the fact that the returns are lower than they could have otherwise been," says Attorney Billy Pritchard with Pritchard, McCall & Jones, LLC.
Pritchard says the lawsuit refers to the RSA's returns over the last ten years--claiming it trails most public pension funds in the United States. It specifically mentions the last three years.
According to Boston-based State Street Corporation, the median returns for 60 large public pension funds were 3.06 percent.
Two funds fell below the average--The Teachers Retirement System and the Employees Retirement System--yielding a 0.45 percent return and a -.24 percent return.
Pritchard says the plaintiffs are now paying the price for low returns after state legislators increased the percentage they must contribute from their paychecks.
"In effect a pay cut for those participants," he says.
The RSA issued this statement in response to the lawsuit:
"The Retirement Systems of Alabama (RSA) takes all litigation seriously and will vigorously defend this lawsuit. At this time, RSA's attorneys are preparing to respond to the complaint in court in a timely manner. The claims and allegations in the lawsuit are without merit and RSA is confident that it will be successful in this litigation."
Montgomery capital wealth manager Brandt McDonald has followed the RSA's investments for years and praises their decisions, but admits the last three years have been difficult on everyone.
"I think that they've done a tremendous job over the last 20, 30 years even. But it just goes to show how serious the problem was--the credit crisis in '07, '08, and '09."
RSA attorneys say they currently have $27.8 billion in assets and currently pay out more than $185 million each month to retirees and beneficiaries. They want to ensure these people that their benefits are secure.
Attorneys filing the lawsuit say they're not looking for any monetary compensation, but rather to change the RSA's investment practices.
RSA attorneys say many of the defendants are still being served with copies of the lawsuit. Some of the defendants include Alabama Governor and RSA Board Member Dr. Robert Bentley and State Superintendent Dr. Joe Morton.
Posted by Monroe County Daily at 9:01 AM