Ex-Chief of S.E.C. Says Public Pension Funds in Danger

In remarks to pension officials from New York and several other states, Arthur Levitt Jr, the longest-serving chairman of the Securities and Exchange Commission, said their world was fraught with problems, including a tendency among elected officials to promise valuable benefits, then fail to set aside enough money to pay for them.

“As the baby boomers begin to retire, we cannot tolerate a shaky pension system,” said Mr. Levitt, who stepped down from the S.E.C. in 2001 and is now a senior adviser to the Carlyle Group, a large private equities firm.

Mr. Levitt was speaking at an annual conference for public pension trustees sponsored by the Pacific Corporate Group, an investment management company that specializes in private equities.

Mr. Levitt said much of the trouble was rooted in pension accounting rules that “fail to reflect accurately” the cost of the benefits that public workers have earned or the value of the assets set aside to pay those benefits.

Mr. Levitt also questioned the way the governmental accounting rule-makers are chosen, saying he thought the trustees of the board should be named by the S.E.C. Currently, various constituency groups recommend trustees.

Even if the pension accounting rules are beefed up, he said, it would make little difference unless the oversight boards of the funds were also improved. Currently, less than half of all public pension funds are thought to have formal education requirements for their trustees.