The Ontario Teachers’ Pension Plan (OTPP) lost its entire $95 million investment in the now-bankrupt crypto exchange FTX, after investing in the platform twice, once during the peak of the bull run in 2021 and again in early 2022. Similarly, the Caisse de dépôt et placement du Québec (CDPQ) pension fund lost its entire investment of $154.7 million in the troubled cryptocurrency lender Celsius Network.
Now that these incompetent managers lost their clients money by investing in outright scams and frauds, they are giving up on the entire cryptocurrency industry, depriving their clients of one of the greatest investment opportunities of our time.
These examples are not isolated incidents. A history of mismanaged pension funds reveals a pattern of pension fund managers making risky and poorly researched investment decisions, ultimately costing the people they are supposed to protect.
One infamous example is the Orange County, California pension fund collapse in 1994. The county’s investment pool lost $1.64 billion due to excessive leverage and risky bets on interest rates, which led to the county filing for bankruptcy. The fund’s manager, Robert Citron, was later convicted of fraud.
Another instance of pension fund mismanagement occurred in the early 2000s, when the California Public Employees’ Retirement System (CalPERS) suffered significant losses due to its investments in Enron and WorldCom. Both companies went bankrupt, and the pension fund lost approximately $565 million as a result.
State pension funds have also been criticized for their investment decisions during the 2008 financial crisis. Many pension funds invested heavily in mortgage-backed securities, which turned out to be toxic assets, leading to severe losses. For example, the New York State Common Retirement Fund lost nearly $1 billion in just three months in 2008 due to its exposure to these assets.
These historical examples demonstrate a consistent pattern of incompetence and underperformance by pension fund managers. As a result, many average people have lost significant portions of their retirement savings.
Pension fund managers must be held accountable for their investment decisions and prioritize the long-term security of retirees, state-run entities in particular should be investigated very closely to see if there was any fraud or conflicts of interest in their decisions to invest their clients money into massive frauds like FTX and Celsius. This type of behavior is exactly what helped keep these frauds alive for longer. Government officials like Gary Gensler out right ignored the signs of fraud, and state pension funds like the OTPP and CDPQ funnelled innocent people’s money into these frauds without their knowledge or consent.