Raimondo, Fung Fight Over Pension Funding, Fees

Allan Fung, Rhode Island’s Republican candidate for governor, released an ad last week slamming his opponent Gina Raimondo for paying “high fees” for “poor returns” on pension investments.

[The ad can be viewed above.]

Raimondo’s campaign issued the following statement refuting Fung’s claims and accusing Fung of mismanaging Cranston’s pension system:

“Allan Fung is recycling the same tired, misleading attacks on Gina that Rhode Islanders have already rejected. Everything Gina has done as Treasurer is to protect workers’ pensions. The fact is, Gina’s investment strategy is working and is providing strong returns with less risk.”

“In contrast, as mayor, Fung has failed to make full payments to the Cranston pension system and is proposing that we actually default on a debt the state owes. That’s reckless, risky and will hurt taxpayers,” she said of his stance on the 38 Studios bonds.

She cited annual financial reports indicating that the city never paid more than 87 percent of its required pension contribution the first four budget years Fung was mayor.

Fung’s spokesman responded to that attack with a subsequent statement:

“Cranston’s locally administered pension plan had been severely underfunded for years before Allan was elected mayor. … He increased contribution levels and negotiated a responsible pension reform plan,” and is “proud of the fact” the city budgets have had enough money to make full payment the last two fiscal years.

The Raimondo campaign has previously acknowledged that the pension system’s investment fees totaled $70 million in fiscal year 2012-13. Around $45 million of those fees were from hedge funds.

The Raimondo campaign has also clarified that the pension system’s hedge fund investments returned 8.8 percent in 2013. The system’s overall portfolio, meanwhile, returned 15 percent.