Whistleblower Exposes America’s Pension Crisis (Uncut) 05-03-2025

Trillion-Dollar Time Bomb: Whistleblower Exposes America’s Pension Crisis | Edward Siedle

Welcome back to Kitco News, I’m Jeremy Safran. What with a record new high price on gold set at about $3,500 an ounce, billionaire hedge fund manager John Paulson now says it could hit $5,000 by 2028 as global trade tensions escalate and central banks continue to move away from the U.S. dollar and the stress is already showing. This week we learned that the U.S. economy contracted for the first time since 2022, hit by a surge in imports ahead of Trump’s proposed tariffs and a slowdown in consumer demand.

That’s more than a recession signal, it’s a warning about the foundations of America’s retirement system. Today’s guest says a real crisis is hiding in plain sight. Edward, or Ted Sedell, is a former SEC attorney, he’s a record-setting whistleblower, and he’s a co-author with Robert Kiyosaki of the book, Who Stole My Pension? How You Can Stop the Looting.

Now he’s investigated over a trillion, a trillion dollars in pension assets, and he warns that the next meltdown won’t come from stocks or banks, it’ll come from inside our pension. He puts it bluntly, quote, rising rates haven’t fixed pensions, OPEC alternatives will implode at the next liquidity shock. So is your retirement safe? Can gold or Bitcoin protect you? And what reforms are needed now to avoid the next financial crisis? Ted, great to see you, nice to meet you, and welcome to Kitco.

Thank you very much, glad to be here. We’ve got so much to get into. I’ve been reading over the book, we’ve been kind of jumping into it.

It’s been a fascinating topic, watching what’s happening with the markets now. And you’ve said, quote, and I want to bring this up, we are on the precipice of the greatest retirement crisis in history of the world. So I guess let’s start with what makes now different? I mean, public pension liabilities exceed $5 trillion.

Are we nearing the tipping point? And more importantly, what HART data supports your warning here? Well, what’s been going on in public pensions, which your viewers should understand, are not subject to any comprehensive federal law, like private pensions are subject to this law called ERISA. Public pensions that have $6 trillion in them are not subject to any comprehensive federal law or any comprehensive state law, for that matter. But on the other hand, they’re supposed to be the most transparent of all pension funds because it involves public money.

And every state has a public records law or what’s commonly referred to as Freedom of Information Act. But what’s been happening over the last two decades is these $6 trillion plus in public pension funds have been migrating to less transparent investments and have been basically eviscerating state public records laws. So what’s in these funds is anybody’s guess.

They’re less transparent today than they’ve ever been in history. Interesting. Okay.

Let’s get your macro outlook before we keep going through this. I want to zoom out a bit. I mean, we just got this first economic contraction in three years.

U.S. GDP declined 0.3 percent in the first quarter, dragged down by a record surge in imports as businesses raced to front load ahead of these steep new tariffs under President Trump’s trade policy. But while the headlines was negative, economists say that the report overstates the slowdown. The Commerce Department even singled out gold and silver imports as a major swing factor in the GDP math.

How do you interpret this moment that we’re in economically? I mean, what vulnerabilities do you think investors and retirees are really overlooking right now? Well, I think this is a unique moment in that there is a crisis going on in the markets. Lack of confidence. Confidence has been shaken.

But this is a manufacturing crisis that was created by the administration. And hopefully that means it can be remedied quickly. This is not like an 08 situation where there were systemic issues.

This is a situation that has been manufactured and hopefully can, by year end, turn itself around. But it’s a very nervous time for all investors, but particularly those who are approaching retirement and have seen their 401k drop by 10 or more percent the last couple of months and are thinking, can they still afford to retire this year, next year? They’re also concerned about, are they going to get their Social Security payments propped like the first time for those who are first applying for them? So there’s a lot of fear and it’s justified, I think. Yeah.

You know, you’ve called public pensions, and I like this one, quote, the dumbest investors in the room. So elaborate here. Could you explain who is taking the most advantage of that? Well, public pensions are truly the dumbest investors in the room because they have boards of directors overseeing them that consist of laymen that have no financial experience whatsoever.

So notably, I did an investigation of the state of Minnesota pension fund a few months ago right before the election, and that’s $146 billion pension fund. And the chairman of the board was a guy named Tim Walz. And Tim Walz, when he was chosen as the VP candidate for the Democratic Party, he said he’d never bought a stock or a bond in his life.

So here’s a guy, chairman of $146 billion pension fund, that’s never bought a stock or bond in his life. So they are the dumbest investors in the room, and Wall Street knows this, and they’re also the least regulated institutional investors. They’re not subject to ERISA.

So Wall Street knows they can sell products to these dumb investors without the same safeguards and features that a ERISA regulated product would have. So it’s a very bad situation. Yeah, I want to get into a little bit more on the Minnesota case.

But before we do that, I mean, what you’re talking about here, who’s profiting from all this? Is it Wall Street? Is it consultants? Is it elected officials? It’s all above. I mean, basically, these funds, these state retirement funds are supposed to be run for the benefit of the participants in the pension plan, like the beneficiaries of the trust, if you will. But they’re not.

They have been hijacked by politicians. And so the money is allocated based upon who contributes to political campaigns. So that’s investment merit is not, the best investments are not selected.

It’s the people who are willing to pay to play, to get in the game. And politicians profit from this. And the taxpayers and the participants in the funds lose a lot.

These funds are substantially underfunded. There’s only 75 cents in these funds for every dollar they owe, if you believe the numbers, which we can go into later. So they’re substantially underfunded.

And if they were federally regulated, they would have to, under the federal scheme, adopt what are called rehabilitation plans. But so they’re substantially underfunded and taking on additional risks, paying high fees to Wall Street. And the situation just keeps getting worse.

Yeah, I guess it all comes back to accountability, too. I mean, after your investigation into the Minnesota Teachers Retirement Association, the TRA, the state of Minnesota admitted it had underreported alternative asset fees by as much as 400 percent. I mean, it’s a discrepancy that was only revealed after pressure from educators and forensic scrutiny, by the way.

So tell us what happened with that case and why there hasn’t been any public accountability. Well, that’s a really remarkable situation, Jeremy, in Minnesota that we announced the investigation, released it September 25th. It was a profile in The New York Post twice.

It was on Fox News. There has not, to this day, been a single article written in the state of Minnesota about our findings. And the findings were very damning, that the pension had cooked the books.

Their performance numbers were unbelievably impossible. And the fees that they were disclosing were substantially understated. And so pension didn’t say a word, but then they secretly changed the numbers that we discovered recently.

But huge discrepancy in the numbers, impossible numbers. And yet it’s not news in Minnesota. It has not been reported anywhere in the state of Minnesota to this day.

Yeah, it’s such a fascinating one, especially when you’re dealing with other people’s capital. They’re talking a little bit about this diversification strategy when it comes to pensions. I mean, at least 17 U.S. states are now considering or have passed legislation to allow up to 10 percent of the pension funds to be invested in crypto.

What do you say to state officials pushing this diversification? I mean, what risks to the taxpayer if these bets fail? Well, to me, crypto is extremely dangerous because there are three risks there. One is the investment risk. Another is the legal risk, because there are a lot of things going on in the crypto market that are questionable.

And I’ve been working with the Department of Homeland Security and ICE and the SEC, the CFTC, all about these payment systems that are being used to circumvent the law. So what you have is the dumbest investors in the room, public pensions, consider getting into a very complex, opaque investment crypto where there are investment risks, legal risks and also technological risks. For example, if you lose your password, those are the technological risks.

A lot of unknowns there. And yet you have elected officials saying they’re going to get into crypto in a low risk manner. Good luck with that.

Yeah, I’m a little bit worried about that, Ted. Well, I mean, you’re talking 10 percent of six and a half trillion dollars. It’s a lot of money that could be lost.

And again, let me repeat, these pensions are already substantially underfunded. They’re only 75 percent funded at best. And so now you’re going to put 10 percent of the money in crypto.

I’d be very wary of that and I would be very skeptical as a taxpayer that elected officials understand the nuances of crypto. Yeah, certainly. We’ve been talking a little bit about that volatility in the markets that we’ve seen with these tariffs and the financial time reports that Canadian and Danish pensions, the giants are halting U.S. private equity deals over Trump’s new tariff chaos.

What signal does that send? I mean, is this the early stage of a foreign capital strike or could this ripple back into the already overexposed U.S. pension portfolios? Well, I think we’re all very concerned about the potential global loss of confidence in the American markets, the American markets. And I’m the leading forensic expert. And I will tell you that as much fraud as there is in our American markets, we have the most transparent, best regulated markets in the world or have.

So if we lose, we have always been a safe haven for foreign investment. If we lose that credibility, that reputation, that’s that would be very dangerous. And that’s what I think so many people are concerned about, because as you know, losing trust is easy.

Regaining it is much more difficult. Yeah, yeah, certainly well said. And of course, it takes that time.

And you’ve uncovered private funds with 50, 50 year lockups, these gradle to grave funds. Can you give us some examples and explain what you mean by five decade loan lockups? I mean, how is this even legal with public money? What happens if we need the liquidity suddenly? Well, the first thing that about these private investments, private equity, private credit, is that the documents that the the the investment documents, the let’s call them prospectuses, are not made public. So the public, if you’re a schoolteacher in Minnesota, you have a lot of your money invested in private equity funds, but you’re not allowed to see the prospectus.

So what these prospectuses say can be very shocking. By the way, I wrote this book also called How to Steal a Lot of Money Legally. It gives a lot of examples from those offering.

There is a lot of stuff in private equity and other private investment documents that would make your hair stand on end if you saw what it said. So there are all of these funds that, you know, like the Minnesota pension fund would be involved in hundreds of private equity funds, underlying funds. And the people who are getting the documents, the people at the pension fund, they can’t make sense of it.

They don’t understand it. Wall Street knows what’s in these documents because they wrote the documents. But I mean, one of my favorite provisions is there’s one of these well-known documents had it in it that they would not disclose to the state pension fund any information that could undermine their reputation.

So you’re a money manager, you’re managing state money, but you’re telling the state you’re not going to tell the state if you’re criminally convicted or engaged in rebounding agent fraud. Why was a state pension fund would ever agree to that? I can’t imagine. But those are the kinds of things you see in these documents.

Yeah. Wall Street seems to be exploiting it, too. I mean, you’ve said that when it comes down to the fact that these public pensions aren’t covered with ERISA.

And I just want to give a little bit of background for our viewers, because ERISA is a federal U.S. law that sets minimum standards for most voluntary established private sector retirement or health benefits plans, 401ks, corporate pensions, insurance plans. If you were back at the SEC, Ted, I mean, what would one rule be that you would implement immediately to protect public workers and taxpayers here? Well, the greatest way to protect these funds, and I proposed a few months ago creating an organization called DOPE, the Department of Pension Efficiency, and it would reform the public pension system. And it’s very simple.

Rule one would be that all public money should be subject to public scrutiny. So you’re going to bring back transparency. And then you would also look, and that would eliminate a lot of investments.

If these private equity managers and hedge fund managers refuse to make their documents public, then they can’t manage public money. That money would not be allocated to private equity. You talk about gold, for example, gold, you know, many gold investments are transparent.

They’ll be happy to give you prospectuses and documents about the gold fund because they don’t consider these documents to be trade secrets or top secret. So by simply enforcing transparency, which used to be the law, you’re going to be changing the asset allocation and you’re going to be improving the performance because the highest cost, highest risk, private equity and other private investments would be off the tape. Yeah, I wonder how you’d enforce the rule across the 50 states with this fragmented oversight in this heavy political influence you’re talking about.

I mean, would it require federal legislation or could state treasurers or pension boards maybe take action now without Washington? Oh, absolutely. These state public records laws are administered. If you ask the treasurer of Rhode Island for pension documents under the state access to public records law, it’s a treasurer who’s going to interpret whether he’s going to decide whether to give you those documents.

And I will tell you from experience, they won’t give you those documents. They will not give investment documents out. Same in Ohio, where I just completed an investigation a couple of years ago of the 100 billion dollar Ohio teachers pension fund.

So these state treasurers could, state attorney generals could enforce public records laws. But pretty much every elected politician across the board, whether it’s governor, attorney general, treasurers, all have concluded that they don’t want to comply with public records laws. And so public records laws are pretty much dead in the water these days.

I’d ask any of your viewers, try to get documents through a public records request and you’ll get shot down. If it’s anything at all valuable, you’re going to get shut down. I’ve got to talk about this, this idea of this pension envy.

You know, you warned that that pension bailouts could create this social unrest and kind of this this envy for Americans with little or no retirement savings. How close are we to that flashpoint? Well, pension envy is very real because the majority of Americans don’t have pensions. And by the way, let me just mention also that the pension issues that Robert and I wrote about this book and Who Stole My Pension, Robert Kiyosaki and I wrote, we’re talking, the issues we’re talking about are toxic assets, investments that are made in America.

These are investments that are made on Wall Street in the United States and then marketed around the world. So whether you’re in a Japanese pension fund or a Dutch pension fund, I actually had a crew from Dutch public television come fly over here to meet with me about 10 years ago because they were in a bunch of American made private equity funds that nobody in the Netherlands understood what they were. So they had to come here to understand what is in their pension fund there.

So this is these issues are of global concern, whether you’re in a Canadian fund or like Japanese fund, Australian fund. They have migrated into a lot of these toxic investments that are made in America. You were talking a little bit about gold there, and I want to get back to because, as we mentioned in the intro, I mean, the John Paulson sees five thousand dollar gold by twenty twenty eight and it’s driven by these trade wars, this de-dollarization, you know, it’s kind of a movement that we’re seeing right now.

If he’s right, would a gold allocation help pensions here? Well, they could and they may very well have a gold allocation. I mean, again, these are we’re talking about state, county and city pension funds, each of which is not subject to comprehensive regulation. So they’re subject to whatever local regulation there is, if there’s even an answer to a lot of these questions.

But it’s not uniform. So, you know, for all I know, the you know, the city of Detroit may be allowed to they may have an allocation of the city of Toledo, may not. So I would I’m sure that public funds have some gold exposure.

How much and how directly, whether it’s through fund to funds or whatever, is something you’d have to look at. But they certainly and they’re they’re also in crypto to some degree indirectly. But but anyhow, you have to look.

I wonder if one of the arguments is, you know, if poor governance would just squander the upside of that anyway. Well, that would be a real issue, because remember, we’ll get back to the cradle to grave funds. Some of these state pensions are these state pensions are in private investments that have a minimum 10 year life.

And I’ve seen them as much as 50 year life. And the 10 year life funds typically have a provision that says that the general partner can extend the life of the fund. In other words, if the fund is doing poorly, what’s the manager going to do? He’s going to extend.

He’s not going to enjoy or welcome that 10 year final accounting. He’s going to extend it. So these illiquid private equity investments are long term and they long term drag down performance.

So, yeah, whatever you’re making on the gold side, you could very well be losing on the private private equity side. You know, you said that the fix is simple, full transparency, broad indexing of pension assets. What’s blocking it? I mean, is it union state politics, Wall Street? Well, it’s it’s basically politicians at the political process in the United States is that pension assets are used, state and local pension assets are used to fund political campaigns.

So no politician is going to run on the platform of we’re going to index all the money and make the pension fully transparent because he’s not going to get any Wall Street money if he does that. So and the workers, the and taxpayers don’t have a voice, really, and they don’t get to vote or choose what pension investments are like here in the state of Florida. We have the.

Three person board, I think the pension fund here is probably close to half a trillion dollars, the state of Florida pension fund has a three person board that consists of the governor, the attorney general and the chief financial officer of the state, none of whom have investment experience, but taxpayers don’t get to vote and about how the money is invested. And they often don’t understand or see just how badly it is, in fact, being mismanaged. Yeah, yeah.

Well said. OK, well, then finally, then, I mean, for teachers, firefighters, municipal employees watching right now, what practical steps can they take to protect themselves if their pension system, you know, is opaque or underfunded or mismanaged? Well, one of the things that I really encourage them to do is to understand and to learn about and understand what’s going on with their pension, because, among other things, the people who are watching their pension don’t really know that much more than they do. So get involved and learn about the investments and don’t assume that the money is going to just be there.

We do have done crowdfunded investigations in about half a dozen states where people get together through a GoFundMe and say they want us to do an investigation and we do it for a very low rate. So that’s an opportunity to commission somebody to do a forensic investigation of the pension and get together with others through a GoFundMe where maybe each person puts up twenty five dollars towards a goal to have the investigation done. But I don’t want to alarm people or scare them.

But what I really want to encourage people to do is to understand the pension that they’re relying on for their retirement security, understand what the investments are, understand what the fees are, show up at a board meeting. These board meetings are open to the public and they hate it when you show up, when members of the public show up at the board meetings. But just, you know, you’re going to be relying on this pension for the next 30 years of retirement.

It’s well worth your time to get to know about, educate yourself about. Yeah. Let’s go to 2026.

I know we got no silver crystal ball, but, you know, if we were to fast forward and there’s no major reform happening, what’s the headline that we’re reading then? I mean, is it a trillion dollars in pension bailouts? Is it 401K envy turns political? How bad could this get? Well, the fact that most Americans don’t have pensions and 401Ks have really failed to achieve the purpose of providing retirement security to several generations of Americans. I mean, you, you’re listeners, but you may well know the average 401K or a 65 year old, I think under a hundred thousand dollars. How do you retire if you have seventy five thousand dollars in retirement savings? Yeah.

I mean, that was that was my follow up. I mean, who gets hit hardest first? I mean, is it the younger workers, the retirees, maybe the taxpayer payers left holding the bag? Yeah, all of the pension benefits will be cut over time, the younger workers will get less generous benefits and taxpayers will, in many cases, have to do a bailout of the funds. And it’s pretty clear that the bailouts are coming.

So and the pension envy is is a real issue. And all this is happening in a country where the demographics speak for themselves. More and more of our nation’s citizens are going to be elderly or above the age of 65.

That number is not going away. We’re not experiencing some kind of crazy baby boom in this country. So the problem is is only going to get worse.

And the the political establishment is not prepared to wean itself off of these, off the money they make from these pensions. So where’s the problem solving going to come? Who’s going to come up with solutions? I don’t know. But I know everybody’s invested in letting the pension looting continue to go on.

Fascinating time. All right, Ted Sedell, former SEC attorney, whistleblower, co-author of Who Stole My Pension. You can follow his work at Substack, where he continues exposing what he calls the most ignored financial crisis in America.

Thanks for making the time for joining us, Ted. Appreciate your time. Thank you.

All right. Thank you. And if you’re a public worker relying on a pension or maybe a taxpayer who may be forced to fund the next bailout, this is a conversation worth sharing.

For more in-depth analysis on gold pensions markets, systemic risk, subscribe right here to Politico News. I’m Jeremy Safron. Thanks for watching.