Alabama's pension funds could be on the verge of tanking. One researcher says the state's pension plans will be depleted within a decade.
The pension crisis is effecting several states across the nation. According to a recent study by researcher Eileen Norcross, the Retirement System of Alabama unwisely counts on making annual returns of 8% when it calculates how much money future retirees will get.
RSA CEO David Bronner has built his career on unorthodox bets on golf courses and tv stations. It's a strategy Norcross says is dangerous.
"Dr. Bronner's strategy is similar to other states, which is to use the pension funds for another purpose, and that's economic development," explains Norcross.
"I don't think that's a good plan because then you run the risk of picking businesses that are going to have more risk associated with them, or investing in things that seem like a good idea at the time but don't pan out in the long run. It's using the pension system for purposes other than what its' there for which is a trust fund for retirees."
As part of a recommendation to the RSA, Norcross suggests adopting an investment strategy that relies on less risky portfolios.
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