Editorial: Pensions should be protected

Friday, July 7, 2000 | 10 a.m.

Nevada's economic development officials are looking at ways to help finance emerging or new businesses in this state, but a plan that would tap the state employees' retirement fund should be treated with skepticism. As the Sun's Cy Ryan reported Monday, the Nevada Economic Development Commission wants to explore using as much as $50 million from the Nevada Public Employees Retirement System's fund to put into venture capital investments in this state. Lt. Gov. Lorraine Hunt, who also is chairwoman of the Economic Development Commission, did stress that no investment should be made unless the home-state company met strict guidelines. Hunt added that the pension funds should be invested in stable businesses, not high-risk ventures.

Certainly, all things being equal, it makes sense to invest in a Nevada company over an out-of-state firm. The concern, however, is that telling the retirement fund's investment firm, Pathway Capital Management Co. of Irvine, Calif., to actively consider Nevada companies could create undue pressure to select Nevada firms over out-of-state companies, even if in its professional judgment a Nevada company may not offer the same return.

It's one thing for the Legislature to set aside money from the state treasury and establish a program to aid Nevada businesses, but it's quite another to start dipping into a retirement fund to diversify the economy. State officials should remember that a retirement fund's sole purpose is to make safe investments that promise a solid return, ensuring that loyal employees are guaranteed healthy pensions when they retire.