Tale of Two Pension Funds: Wisconsin vs. Nevada

Guess which one delivers better returns for both taxpayers and pensioners?

{{ The investment board paid a total of about $66 million to roughly 300 people last year in salary and other compensation as well as bonuses for their performance in 2021. The average bonus for the 84 investment management staffers was $206,452, state auditors found.

State auditors have raised concerns about compensation, though. In one case they flagged, an investment board employee got a $180,000 signing bonus in 2019, then left the next year with another $180,000 in severance—without paying back the signing bonus.

{{ Steve Edmundson has no co-workers, rarely takes meetings and often eats leftovers at his desk. With that dynamic workday, the investment chief for the Nevada Public Employees’ Retirement System is out-earning pension funds that have hundreds on staff.

His daily trading strategy: Do as little as possible, usually nothing.

The Nevada system’s stocks and bonds are all in low-cost funds that mimic indexes. Mr. Edmundson may make one change to the portfolio a year.

News doesn’t matter much.

Will the 2016 elections affect his portfolio? “No.”

Oil prices? “No.”

He follows Fed Chairwoman Janet Yellen, but “there’s a difference between watching and acting.”

Mr. Edmundson, 44 years old, has until recently been a pension-world outlier. Other state retirement systems turned to complicated investments and costly money managers to try to outperform markets with algorithms and smarts.

His strategy is to keep costs low and not try beating markets, he says. “We’re bare bones.” }}

After doing this for 40+ years, I’ve learned that It’s possible to retire early just by not letting yourself get screwed. You don’t have to invent something, start a business, or do anything special. Merely watching your expenses and capturing the “skim-free”, compounded return on a broad stock market index fund over an investing lifetime is enough to do it for you. There’s even a good chance it will make you reasonably wealthy, all with doing squat.



True! But in all fairness, when I entered the work force in 1989 things were a lot different. Texas Instruments had only 4 choices for their 401k plan. One was company stock, the other was a money market, a third was “stocks” and a fourth was “bonds”. That was it. Buying and selling stock had to be in units of 100 shares and commissions were high - you had to talk to an actual person on the phone to do this. Today is a different investing world.

My daughter is likely 9-10 years away from starting her career. What will the investing landscape be by then? Tax laws? What will it be in 30 or 40 years?

Go further back with my parents. Pensions were the thing. Whole life insurance policies were the thing. Selling your house at big profit and down sizing. That was the retirement plan way back in the 60s.

I cannot follow my parents path to retirement. It is likely my daughter won’t be following my path either. Its almost a wonder anyone can save and invest and plan for something 40-50-60 years down the road given how much things change.


Same thing at Exxon in the early 1980’s when I worked there (i.e., 1) Exxon Company Stock. 2) MM Fund. 3) “Stock Fund” which was a low-cost S&P 500 index fund, but it wasn’t called that back then, and 4) Bond Fund.)

Of course, almost everyone was 100% Exxon

For the past 150 years, the S&P 500 has delivered inflation plus 6% to 7% per year over time, but somehow that went unnoticed. Of course, there was no reason for a knowledgeable person to tell you that if he could sell you a high-fee investment product instead, or entice you into the casino of choosing individual stocks.


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This can’t be emphasized enough. If you save about 15% of your income, in most cases you can retirement comfortably in about 30 years. A company match to your 401(k) or increasing the savings rate a bit will cut years off that number. The power of compounding is a hellvua thing.