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Kentucky state workers sue investment firms over pension shortfall

From Reuters - December 27, 2017

(Reuters) - A group of Kentucky state workers filed a lawsuit against state retirement system officials and three asset management firms on Wednesday, saying they breached fiduciary duties by embracing high-risk, high-fee investments that yielded lackluster returns.

Kentucky has one of the nations most underfunded public pension funds, with nearly $16 billion in assets and a shortfall the suit estimates to be at least $27 billion.

The retirement and health benefits of 360,000 state workers, from police officers to janitors, depend on Kentuckys pension fund.

The lawsuit in Franklin Circuit Court seeks damages from KKR Prisma, Blackstone Group and PAAMCO for losses on investments they recommended. It also names several former or current Kentucky Retirement Systems officials as defendants.

Blackstone and KKR on Wednesday said the claims were baseless.

The Blackstone fund referenced in the complaintdelivered to the Kentucky Employees Retirement System positive returns outperformingrelevant benchmarks, the group said in a statement.

We take our fiduciary duty very seriously and believe that the allegations about our firm are meritless, misplaced and misleading, said a separate statement issued by KKR.

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