Republican gubernatorial candidate Christian Fong says now is “not the time to stick our heads in the sand” and just hope the Iowa Public Employees Retirement System (IPERS) rights itself. Fong is a chartered financial analyst — the designation for those who manage investment portfolios and he says the $4 billion drop in value of that IPERS fund is a “big hole.”
“I’ve spent the last 10 years of my life in the investment profession and so I have a unique view of what it would take to manage IPERS through this sort of situation,” Fong says. “…My own family depends on IPERS. My wife, a former school teacher, has an retirement account there. Look, I join more than one-in-10 Iowans who depend on IPERS and have a very personal concern as well.”
About 320,000 Iowans who are or have been employed in public sector jobs have IPERS as their pension system. Teachers, fire fighters, police and other local government employees are part of IPERS — in addition to state government workers. On Tuesday, Governor Culver — a Democrat — said there was no need for alarm or legislative action in the coming year to address the IPERS shortfall. A consultant has suggested fund managers may have to consider reducing benefits for future retirees or increasing the contributions public employees make into the system each pay period. Fong says those options should be on the table, but Fong opposes the idea of using general state tax dollars to fill the hole.
“This is not the right time to engage in state-level bailouts,” Fong says. “When we look at the federal level, that’s been the tool of choice for any institution that gets itself in trouble is to say, ‘Hey, the government’s going to step in and is going to bail this out.’ In the end, that puts taxpayers on the hook for mismanagement. It simply encourages risky behavior on into the future.”
Fong says it’s time to “draw a hard line” and say taxpayers will not bail out IPERS.
“The state, as a whole, has kind of gotten itself into a pickle,” Fong says.
If he’s elected governor, Fong says he’ll appoint more investment fund managers to the board that oversees IPERS. Today, just one of the 11 members of the IPERS board is an investment fund manager. Fong is also a certified commercial investment manager, as he managed commercial real estate transactions for AEGON, a Cedar Rapids-based insurance company. Fong shifted to steering AEGON’s investment strategies in Asian markets this past spring.