Before he entered Pennsylvania’s Senate race, David McCormick oversaw a giant hedge fund that invested billions of dollars for the retirement plans of the state’s teachers.But Mr. McCormick’s company, Bridgewater Associates, delivered such middling profits and charged such high fees that the Pennsylvania teachers’ retirement fund moved to sell off its Bridgewater holdings beginning two years ago.Overall, Bridgewater’s performance was a contributing factor in nearly a decade of poor returns for the retirement fund, trustees of the fund said in interviews.The impact is now being felt indirectly by thousands of teachers who have to pay more from their paychecks to fund their retirements, an extra $300 annually in some cases.Since jumping into the Republican primary in January, Mr. McCormick has offered his business career as a qualification for the open Senate seat in November, but he has made little mention of his connection to the state’s teacher pension fund, which has long been mired in controversy, nor to the more than $500 million in fees that Bridgewater was paid by the fund.But on Tuesday, Mr. McCormick’s chief Republican rival, the celebrity doctor Mehmet Oz, sought to use those high fees and Mr. McCormick’s decade on top of Bridgewater, the world’s largest hedge fund, against him.“We’re stuck with a half-a-billion-dollar bill while he and his colleagues got half a billion in fees,” Dr. Oz said outside the Harrisburg headquarters of the pension fund, the Public School Employees Retirement System, known as PSERS. He addressed a small group of supporters with a large prop check made out for $500 million.“The fact that no one knows this story,” he added, is “shameful.”Until 2019, the retirement fund had nearly $5 billion invested with Bridgewater, among the most of any firm, and it was one of the hedge fund’s top clients.In response to Dr. Oz, the McCormick campaign said that Bridgewater had made plenty of money for the retirement fund and that Mr. McCormick, who served as president and later as chief executive of the hedge fund, was not directly involved in overseeing its relationship or investments with PSERS.The dispute is the latest round in a slugfest between Mr. McCormick and Dr. Oz, whose primary contest will help shape one of the most crucial races this year for control of the Senate. The two candidates and their outside supporters have already spent a state record $30 million in attack ads ahead of the May 17 primary. A Fox News poll this month of potential Republican voters showed Mr. McCormick on top of a five-person field, although many voters are undecided. Guide to the 2022 Midterm ElectionsMidterms Begin: The Texas primaries officially opened the 2022 election season. See the full primary calendar.In the Senate: Democrats have a razor-thin margin that could be upended with a single loss. Here are the four incumbents most at risk.In the House: Republicans and Democrats are seeking to gain an edge through redistricting and gerrymandering, though this year’s map is poised to be surprisingly fairGovernors’ Races: Georgia’s contest will be at the center of the political universe, but there are several important races across the country.Key Issues: Inflation, the pandemic, abortion and voting rights are expected to be among this election cycle’s defining topics.A West Point graduate and former Treasury Department official, Mr. McCormick was recruited by Bridgewater as president in 2009, rose to co-chief executive in 2017 and became sole chief executive in 2020 before leaving in January to run for Senate.The Pennsylvania teachers’ pension fund has been troubled for years. Besides hedge funds, it put its money into highly risky “alternative” investments including trailer park chains, pistachio farms and pay phone systems for prison inmates.In mid-2020, the fund’s annual profits over nine years, a decade when the stock market boomed, amounted to just 6.34 percent, missing a target set by Pennsylvania law.The shortfall prompted $80 million in higher paycheck deductions for about 100,000 teachers and other school employees, as well as higher property taxes for homeowners statewide, to pay for school districts’ makeup contributions to the pension fund, said Stacy Garrity, the state treasurer.ImageMr. McCormick’s campaign said that he had not directly been involved in overseeing Bridgewater Associates’ relationship with the Pennsylvania teachers’ retirement fund or overseeing the fund’s investments.Credit...Libby March for The New York TimesMr. McCormick, who declined to be interviewed, said through a campaign spokeswoman that PSERS’s poor performance was not the fault of its Bridgewater holdings — as Dr. Oz argued — and that those holdings had earned money for the pension fund.By: Trip Gabriel
Title: McCormick Faces Scrutiny Over Hedge Fund’s Handling of Teacher Pensions
Sourced From: www.nytimes.com/2022/03/16/us/politics/david-mccormick-teacher-pensions.html
Published Date: Wed, 16 Mar 2022 09:00:21 +0000
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