A couple of days ago, the McCord Campaign released another mudslinging attack ad that compared Tom Wolf to Tom Corbett when it comes to pensions because Corbett slayer, Rob McCord, is the end all, be all on pensions. In the video, the ad claims that Wolf’s company terminated the company’s traditional pension plan and that PSERS, the Commonwealth’s largest pension account, lost millions while investing in Wolf’s company.
When looking at the possibility of Wolf terminating the company’s pension plan, FactCheck.org states:
Wolf’s stated position is that he “absolutely” opposes any change in the state’s pension benefits. So if he actually had done what Corbett proposed, as the ad tries to suggest, it might convince the state’s Democratic voters to nominate McCord for governor instead of Wolf in the May 20 primary. But Wolf didn’t. “[T]he decision to close the defined benefit plan took place during the time frame after Wolf sold his company but before he came back to run it,” the Capitolwire story said.
Wolf and his cousins sold 47 percent of their family kitchen cabinet company in 2006 to a fund run by Boston-based Weston Presidio, a private equity firm. Wolf ceased day-to-day management and joined the administration of Democratic Gov. Ed Rendell as secretary of revenue in early 2007. He and his two cousins each retained 11 percent ownership, according to the Philadelphia Inquirer. But Wolf did not return to management until 2009, after the company fell on hard times during the 2007-2009 business downturn.
Nevertheless, a McCord campaign official insisted that the ad is fair. “If Tom Wolf believes that it is ‘critically important to protect defined benefit plans,’ [as Wolf has stated] then he could have re-instated the Wolf Organization’s defined benefit plan upon his return,” campaign spokesman Mark Nevins wrote in an email to us.
On the claim that PSERS was “the biggest loser,” FactCheck goes on to explain:
But the Pennsylvania pension system’s theoretical loss is only a small fraction of that sum. According to its regular reports to investors, the state’s pension fund owns only 5 percent of the $1 billion Fund V.
Furthermore, our own research leads us to think the total loss is somewhat less than the ad states. In its most recent report, Weston Presidio shows a “total valuation” of its Wolf investment at just over $22.7 million (counting previously realized gains of more than $3 million), which puts the total paper loss at a bit over $18 million. And again, Pennsylvania’s loss would be 5 percent of that figure.
The Inquirer said the Pennsylvania State Employees’ Retirement System was the “largest” of the investors in the Fund V, which logically would make Pennsylvania’s pension system the “biggest loser” as the ad states. But it’s barely true at best. Pennsylvania’s 5 percent stake is followed by a 4.5 percent stake held by a “Pension Reserves Investment Trust,” then by Harvard University’s 4 percent, and a 3.5 percent holding by the Los Angeles County Employees Retirement fund. Weston lists a total of well over 100 institutional investors and dozens of private individual investors as well.
More important, that paper loss in the Wolf Organization investment took place while Wolf himself was not running the company, and after the recession hit in late 2007. Indeed, the theoretical loss might have been worse if Wolf had not returned, re-investing personal funds and resuming management of the company in 2009.
Then FactCheck calls out the McCord Campaign for trying to deceive voters:
The McCord campaign denied any intent to deceive. In an email to us, campaign spokesman Nevins said the ad’s reference to a “state pension investment fund” is meant to refer to Weston Presidio, not to the Pennsylvania retirement system. He said, “a ‘state pension investment fund’ is, as the name makes clear, an investment fund that invests for state pensions.”
Really? In fact, the 100-plus institutional investors in Weston Presidio Fund V include fewer than a dozen state or municipal pension funds. Calling it a “state” fund on those grounds seems to us about as logical as calling Citibank a “widows and orphans bank” because some widows and orphans might be depositors. Weston Presidio refers to itself as a “private equity firm” whose investors include “leading financial institutions, major corporations, pension funds, endowments and individuals” — not just state pension funds.
Leave a Reply