With $54 million in assets, Oakland’s Police and Fire Retirement System (PFRS) is a closed pension fund that specifically pays retirement benefits to former Oakland firefighters and police officers. Unfortunately, trustees of PFRS recently held hearings on a proposal to divest entirely from fossil fuel companies. Not only would this reduce the pension’s return on investments, but it could possibly force the City of Oakland to bail out the pension fund with tax dollars meant for city services.
California is no stranger to divestment threats. The California State Teachers’ Retirement System (CalSTRS), the California Public Employees’ Retirement System (CalPERS), and many universities, including Stanford, have juggled with the idea of total fossil fuel divestment. However, after review, many of these funds and endowments recognized that the risks and responsibility to their beneficiaries outweigh the political activism. Even Chris Ailmain, CalSTRS Chief Investment Officer, stated:
“I’ve been involved in five divestments for our fund. All five of them we’ve lost money, and all five of them have not brought about social change.”
Members of the PFRS board and their outside pension consultant, David Sancewich, are concerned about the status of the Oakland fund, which would surely suffer if the board passes the proposal. Specifically, Sancewich, an experienced analyst, advised against divestment in a report presented during the hearings saying that the risk of divesting from fossil fuels is that the fund would earn “suboptimal returns.”
Oakland’s civil servants do not deserve the possibility of “sub-optimal returns.” Instead they should have full confidence that their retirement will remain strong and secure for many years to come.