State Pension Fund Losses in Bear Sterns Aftermath

June 20, 2008

Most pension funds have suffered serious losses in value as a result of the current financial crisis. The State of Michigan Retirement System is no different. Many of you have heard about the $63 million loss realized by SMRS as a result of the Bear Stearns collapse. The losses are concerning, but small in comparison to the overall size of the pension fund (approximately $60 billion). All plan participants should know that these losses do not put their plan benefits and the long-term financial health of the fund are not at risk.

It is important to note that when a major bank like Bear Stearns collapses, there is little a large institutional investor like SMRS can do to avoid the losses. It is also important to note the value in Treasury's and the AG's willingness to sue Bear Stearns and seek lead plaintiff status in that suit. It demonstrates that SMRS takes seriously its commitment to aggressively recovering short term losses and taking action to protect the long term value of the pension fund. Lastly, it is important for plan participants to know that Treasury has recently stepped up their corporate governance activism to prevent companies like Bear Stearns from behaving recklessly.

For Background, Check out the June 16th article in the Detroit Free Press.