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The 2014 Pension 40: Alejandro García Padilla

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Alejandro García Padilla
Governor
Commonwealth of Puerto Rico
Last year: 28

Puerto Rico may have the worst pension problem in the U.S. The commonwealth has a pension deficit of more than $37 billion. The funding ratio of its Employees Retirement System is 3.1 percent; its Teachers Retirement System is at 15.6 percent. A recent report by the Government Development Bank for Puerto Rico said net assets of the Employees fund will be depleted by 2018–’19 and Teachers will run dry in 2021–’22. In November 2012, Alejandro García Padilla, a Democrat, beat incumbent governor Luis Fortuño by a razor-thin margin by promising to fix Puerto Rico’s economic problems: crime, high utility costs and unemployment. He has taken steps to plug the commonwealth’s deficit, of which the pension fund is just a part. In late November, Padilla, 43, called a special legislative session to win support for a $2.9 billion bond sale backed by an unpopular tax increase, which Moody’s Investors Service said is essential if the commonwealth is to remain solvent. Still, efforts to close the pension deficit have fizzled. Much of a 2013 reform of the Teachers fund was overturned by the courts. Not only has Puerto Rico not paid higher contributions to Employees as agreed to in 2011, but in June the governor slashed contributions by an additional $84 million. The plan tried to make up for its shortfall by issuing $2.8 billion in pension obligation bonds, while Teachers and a smaller, judicial retirement fund tapped investment principal. Then there is the so-called personal loan program: The Employees fund allows beneficiaries to take personal loans of up to $5,000; on June 2013 outstanding loans made up the equivalent of 76 percent of the fund’s net assets.

The 2014 Pension 40

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2
3
4
5
Bruce Rauner
Illinois
John and
Laura Arnold

Laura and John
Arnold Foundation
Randi Weingarten
American Federation of Teachers
Rahm Emanuel
Chicago
David Boies
Boies, Schiller & Flexner
6
7
8
9
10
Randy DeFrehn
National Coordinating Committee for Multiemployer Plans
Damon Silvers
AFL-CIO
Laurence Fink
BlackRock
Chris Christie
New Jersey
Robin Diamonte
United Technologies Corp.
11
12
13
14
15
Ted Eliopoulos
California Public Employees’ Retirement System
John Kline
Minnesota
J. Mark Iwry
U.S. Treasury Department
Gina Raimondo
Rhode Island
Phyllis Borzi
U.S. Labor Department
16
17
18
19
20
Orrin Hatch
Utah
Abigail Johnson
Fidelity Investments
Ted Wheeler
Oregon
Caitlin Long
Morgan Stanley
James Hoffa
International Brotherhood of Teamsters
21
22
23
24
25
Amy Kessler
Prudential Financial
Alejandro
García Padilla

Puerto Rico
Christopher Klein
U.S. Bankruptcy Court for the Eastern District of Caifornia
Steven Rhodes
Bankruptcy Court for the Eastern District of Michigan
Kevin de León
California
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27
28
29
30
David Draine
Pew Charitable Trusts
Jordan Marks
National Public Pension Coalition
Sam Liccardo
California
Joshua Rauh
Stanford Graduate School of Business
Karen Ferguson and Karen Friedman
Pension Rights Center
31
32
33
34
35
Timothy Blake
Moody’s Investors Service
Kathleen Kennedy Townsend
Center for Retirement Initiatives, Georgetown University
Edward (Ted) Siedle
Benchmark Financial Services
Daniel Loeb
Third Point
Judy Mares
Employee Benefits Security Administration, U.S. Labor Department
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37
38
39
40
Andrew Biggs
American Enterprise Institute
Andy Stern
Columbia University
Kenneth Mehlman
KKR & Co.
Teresa Ghilarducci
New School for Social Research
A. Melissa Moye
U.S. Treasury Department


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