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Category Archives: Blog
Last week, the Seattle University Board voted to divest from fossil fuel holdings from the university’s $230 million endowment. Presently, the endowment holds $13.6 million – or 6.7% – stock in fossil fuel companies. The University Board and students would be wise to consider the thoughtful judgement of the Seattle Pension Board last year before deciding to divest from these holdings.
Pensions were an exchange for lower base salaries for public employees. Now, that once promise is now not a guarantee. Sarah Krouse reported in a Wall Street Journal article that the pension shortfall is the size of Germany’s economy. This unknown national financial crisis is crippling all hope pensioners once had in a comfortable retirement.
Activists remain focused on politicizing pension funds and jeopardizing the financial future of public servants. By many accounts, these efforts have failed to convince pension funds, university endowments, and other entities from divesting holdings from companies the activists do not agree with.
Across the nation, we have seen a trend towards substituting outright divestment for non-binding annual reports to pension managers, legislators, or other interested parties. A recent example of a bill repurposed from annual reporting is the California Senate … Read More
Some rallied activists and environmentalists turned up the heat this year on divestment efforts across the nation targeting pension funds, endowments, and institutions that have fossil fuel holdings as part of a broader, diverse stock portfolio.
The California State Teachers’ Retirement System (CalSTRS) quickly became a top-target for divestment supporters. CalSTRS released a short video explaining its reasoning not divesting and its mission to engage with companies.
CalSTRS rightfully notes, “Divestment undermines our long-term strategy and increases risk.” If pension … Read More
Andy Kessler’s piece in The Wall Street Journal titled “Stocks Weren’t Made for Social Climbing” accurately described the misguided approach to social investing. He writes, “Profits are the best measure of a business’s value to consumers.” According to a study released earlier this month, pensioners and retirees feel the same. Surveyed pension holders overwhelmingly weighed strong, steady returns as the most important issue in contrast to those who find social causes to be the top priority.
Kessler is accurate … Read More
A Fitch Ratings report released in December illuminated the growing pension burden facing Prairie state pensioners. Illinois’s net pension liabilities totaled $151.5 billion at the end of the 2016 year. This cost is increasing year-over-year and elected officials continue allowing the burden to grow rather than deal with the problem.
If it was not noticeable before, the Fitch Rating report shows Illinois cannot afford to ignore the problem any longer. The total liabilities equate to 22.8% of residents’ personal income. … Read More
The former Connecticut state treasurer, Christopher Burnham, wrote an opinion piece in The Hill on Sunday titled “Pensions should avoid politics and invest for the benefit of our workers.” Burnham described his views on the growing activist calls to divestment pension funds from certain industries. During his tenure as Connecticut’s state treasurer, Burnham was the sole fiduciary of the then $16 billion pension system. Later, Burnham served as the general of the United Nations as the sole fiduciary … Read More
There is a growing gap between pension obligations and outstanding liabilities. This is a concern for retired public servants relying on a comfortable pension fund to sustain their future. Inaction on part of lawmakers to close the gap is unacceptable. Kentucky is an example of a state with a mismanaged pension crisis. The annual report revealed that the five pension plans that make up the Kentucky Retirement System increased from $21.17 to $26.75 billion in the last fiscal year. The … Read More
Illinois pensioners are facing a haunting reality this Halloween: pension funds are suffering from a 50% under funding burden that is weighing heavily on local and state government budgets. Bond Buyer reports in just one-year public pension liabilities grew by over $17 billion between fiscal year 2015 to 2016.
Illinois published a report by the Public Pension Division of the Illinois Department of Insurance that provides a comprehensive analysis of the 671 public pension funds in the state. The results … Read More
Funding for local, state, and federal public pension plans are in a downward trend, creating billions of dollars in outstanding liabilities. Pensions & Investments recently released reported on the top 100 public pension plans, in which the findings are alarming. Even as contributions increase, the funding gap is also seeing year-over-year increases. As the executive vice president and the director of capital markets research at Callan Associates Inc., Jay V. Kloepfer said, “It’s not enough contributions. That’s it. There … Read More