A look at what's going on with the state of Florida's public pensions says a lot about the state of public pensions in general, which may amount to good news for hedge funds (hedge fund news) and private equity funds (private equity news). Hopefully, this will not ultimately spell bad news for pensioners.

Like many other public pensions, the Florida pension, despite a decent performance in 2009, faces a shortfall when it comes to meeting its obligations to pensioners. By July, according to the Miami Herald, the fund will likely have just 87 cents for every dollar of obligated payouts. This fact is not lost on politicians who have put forward a variety of proposals, such as raising more from local governments, making employees contribute to the pension or actually cutting back benefits.

The problem is that none of these are politically palatable. So the fund seems to be counting on higher returns, which is never wise. Nevertheless, it is pushing deeper into hedge funds, private equity and other higher-reward investments. That sounds good on paper. But the strategy could easily backfire, as recent events have shown. This may or may not have a happy ending for all too many pensions. 

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