Press Release: Divestment- The Impact of Political Decisions on Public Pensions
New White Paper: Divestment – The Impact of Political Decisions on Public Pensions
A year after New York City officials called for the divestment of city pension funds from fossil fuels, divestment remains a costly and dangerous strategy. New research from IPFI details the negative impact of divestment.
Arlington, VA – The Institute for Pension Fund Integrity (IPFI) has been consistent in its view that public pension funds should be immune from political gamesmanship. However, divestment movements around the country continue to pressure plan managers to politicize their funds. Divestment has repeatedly been shown to be a harmful and ultimately ineffective tool, and the latest white paper from IPFI demonstrates this clearly. Divestment serves only as a messaging device for politicians to feign action to their supporters, and causes real harm to retirees.
Even though divestment has been shown time and again to be detrimental to the financial wellbeing of pension funds, this has not stopped New York City Mayor Bill de Blasio and Comptroller Scott Stringer from moving forward with their plan to divest city assets from energy companies. In December 2018, the comptroller's office issued a Request for Proposals to support the city's intended divestment strategy for three of the city's five public pension funds. Proposals are due by February 8, 2019. This move is meant to push forward their political agenda and will only continue to weaken the already fragile financial stability of New York City pension funds, which are currently facing billions of dollars in unfunded liabilities.
When New York City first published their Request for Information to inform their divestment plans, IPFI submitted a report detailing the argument against divestment. Unfortunately, the city disregarded our opinion as well as the opinions of the New York City Police Pension Fund and New York City Fire Pension Fund who have also voiced their opposition to the move. As the city continues to move forward with its plans, IPFI will continue to push back against politicians who forget their duties as fiduciaries.
"Hundreds of thousands of New Yorkers depend on the city to ensure their financial security and deserve a secure retirement. By moving forward with their plans for divestment, Mayor de Blasio and Comptroller Stringer are using these retirees as pawns in their political games," said IPFI Chairman and former Connecticut State Treasurer, Christopher Burnham. "de Blasio and Stringer are abdicating their fiduciary responsibility by furthering their divestment scheme, and it's time that retirees demand that they focus on growing returns – not playing politics."
In the hope of preventing other cities from travelling down the perilous path of political divestment, IPFI's new white paper details the various arguments against divestment. The paper explains why divestment is so harmful to financial performance and highlights several case studies that illustrate how acts of divestment have had serious negative impacts on the financial stability of public pension plans.
To learn more about the pitfalls of divestment, read our latest white paper and view other research at www.ipfiusa.org.
The Institute for Pension Fund Integrity seeks to ensure that local, state and federal leaders are held responsible for their choices in investment, led not by political ideation and opinion but instead by fiduciary responsibility. IPFI is a non-partisan, non-profit organization based out of Arlington, Virginia, and spearheaded by former Connecticut State Treasurer and former Undersecretary General of the United Nations, Christopher B. Burnham.