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State Pension Funds Shouldn't Be Captive to Politics

"In a misguided effort to fight climate change, State Sen. Liz Krueger introduced Senate bill 2126, the Fossil Fuel Divestment Act, earlier this year.... Pension funds have begun to realize that the costs of divestment are not worth the political statement.... It only hurts retirees and local economies. Fellow pensioners, retirees and taxpayers must demand separation between political opinions and public pension management. Politicians should not jeopardize our hard-earned retirement and a healthy economy because of a political agenda." [The author is the former vice chairman of the New York City Fire Department Pension Fund.]

Fallout from COVID-19: Public Pension Funding

"While an economic disruption of this magnitude may not have been on the radar of investors and public officials, it demonstrates the unrealistic optimism that states have held for pension fund returns on investment.... What policy changes could be implemented to prevent such pension funding crisis in the future?"

Cryptocurrency: The Future of Pension Funds?

"[N]early 80% of institutional investors said they find something appealing about digital assets, with the three almost equally compelling characteristics being that it is uncorrelated to other asset classes; is an innovative technology play; and has a high potential for upside."

Illinois Pension Funding Crisis Looming, Tax Measure Failure Hurts Prospects

"Rather than raising taxes on the wealthiest to cover the pension deficit, the state will now have to look toward alternative measures, including broader tax increases across the board as well as cutting future pension earnings for new workers. One of the paths to reform would be a complete overhaul: a constitutional amendment to cut already-promised benefits. The state should also consider taking smaller measures, including considering more stable investments and using more realistic investment predictions."

With Proxy Reforms the SEC Takes a First Step in Improving the Health of U.S. Pension Funds

"Nearly a year after it held a roundtable on the topic, the [SEC] ... issued 'an interpretation that proxy voting advice provided by proxy advisory firms generally constitutes a "solicitation" under the federal proxy rules.'... Public pension funds are already underfunded and underperforming. The SEC is in a unique position to address a serious problem. Now is the time for leading officials to ensure that investments are based, in the SEC's own words, on 'timely, comprehensive, and accurate information,' not on blanket recommendations steeped in ideology."

DOL Seeks to Limit the Scope of Employee Benefit Plan Proxy Voting

"The Institute for Pension Fund Integrity applauds the Department's effort to address the systemic issue of undue influence of proxy advisory firms in shareholder voting, and while the scope of this proposed regulation is limited to ERISA-backed pension funds, we believe that it serves as a key step toward much-needed reforms."

ESG Investing for Public Pensions: Does It Add Financial Value? (PDF)

10 pages. "ESG investment measures have become increasingly politicized through institutional investors and pension funds' growing reliance on proxy advisory firms. These advisory firms have introduced political agendas for corporate governance decision-making, leaving corporations and pension funds to operate at the whims of advisory firms with serious conflicts of interest that disregard investor value.... ESG investments should be made when they add value to a fund. When such investments will not improve the financial performance of the fund, or the decision to invest in them is based on political motives, they should be forgone."

South Dakota Continues to Lead the Nation in Public Pension Returns, Without the Need for Proxy Advisors

"[U]nfunded liabilities remain the norm [for public pensions], with fund managers continuing to make politicized but underperforming investment decisions rather than prioritizing returns for beneficiaries.... South Dakota is a shining example, with a funding ratio of over 100 percent and investment returns that are 71 basis points stronger than the 60/40 index portfolio."

Public Pensions and COVID-19: Confronting a Crisis, and Opportunities for Reform (PDF)

15 pages. "The market downturn of the last several months has exacerbated the funding shortfalls facing many public pensions funds across the country ... In the short- and medium-term, pension funds will have increased difficulties meeting their required contributions and other financial obligations, and many may also face a liquidity crisis.... [P]ublic pension fund managers are now in a position to implement long-needed reforms to their investment, management, and public policy strategies."

New Kentucky Lawsuit Takes Aim at Risk in Public Pension Investments

"The state of Kentucky revived and expanded a lawsuit that claims former officials of the state pension system and hedge fund firms violated their fiduciary duty by choosing risky investments. The state is demanding compensation from hedge funds for their excessive fees and underperformance. Kentucky's pension system remains one of the worst-funded in the nation, hovering around a 32.8% funding level." [Mayberry v. KKR & Co., L.P., No. 17-CI-01348 (Franklin Cir., Commonwealth of Ky. intervening complaint filed Jul. 20, 2020)]