< The 2014 Pension 40: The Battle Is On
22
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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| 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 |
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| Randy DeFrehn National Coordinating Committee for Multiemployer Plans | Damon Silvers AFL-CIO | Laurence Fink BlackRock | Chris Christie New Jersey | Robin Diamonte United Technologies Corp. |
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| 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 |
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| Orrin Hatch Utah | Abigail Johnson Fidelity Investments | Ted Wheeler Oregon | Caitlin Long Morgan Stanley | James Hoffa International Brotherhood of Teamsters |
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| 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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| 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 |
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| 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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| 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 |
