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Crypto fallout leaves U.S. retiree benefits mostly unscathed

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Similarly, Fairfax County Employees’ Retirement system has about 3.5% of their assets, or $150 million, in various strategies and funds with crypto exposure, Chief Investment Officer Andrew Spellar wrote in an email to Bloomberg. The most recent quarterly reports for those funds have been flat to up slightly, Spellar wrote. The county’s police officer fund also holds more than 7.5% of its assets in crypto, though its Chief Investment Officer Katherine Molnar said neither fund has any material exposure to FTX beyond standard market volatility.

Pensions likely have some risks tied to FTX, given the crypto exchange’s long list of partners and more than a millon creditors. While the New Jersey Department of Treasury told Bloomberg it does not actively seek to invest in crypto, its system has holdings in Coinbase and MicroStrategy as well as companies including BlackRock and Signature Bank, which have indirect exposure to crypto.

Funds are seeing some red with bitcoin, the world’s largest cryptocurrency by market value, down over 71% since its high in November 2021, coupled with historically high inflation and volatility in equity and bond markets. Public pensions funded ratio declined to 74% from 78%, as of June 30, according to Center for Retirement Research.

David John, a senior policy adviser within AARP’s Public Policy Institute, said most pension funds will be largely shielded from the latest crypto winter. But he expects a number of retirees may see great losses from individual crypto investments in the coming years.

According to Anthony Randazzo, executive director at Equable Institute, 14 pensions invested a small fraction in FTX either through hedge fund Tiger Global or private equity firm Institutional Venture Partners. CalPERS, for instance, invested $300 million of its now $400 billion pension system in a Tiger Global fund that invested some money into FTX.

The overall exposure is minuscule in a system of roughly 6,000 public sector plans, whose total assets hover around $4.5 trillion.

“This is not going to make or break any of these pension funds,” Mr. Randazzo said.



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