States Divest Unilever Stock Over Ben & Jerry’s Boycott

Link: https://www.ai-cio.com/news/states-divest-unilever-stock-over-ben-jerrys-boycott/

Excerpt:

State treasurers in New Jersey and Arizona are divesting approximately $325 million in investments from consumer goods giant Unilever after subsidiary Ben & Jerry said it will stop selling its ice cream in Israeli-occupied territories.

In July, the company said in a statement that it was “inconsistent with our values for Ben & Jerry’s ice cream to be sold in the Occupied Palestinian Territory.” It said it has informed the licensee that manufacturers the ice cream in the region that it will not renew its license when it expires at the end of 2022. Despite leaving the Palestinian territories, Ben & Jerry’s said it will stay in Israel through a different arrangement that has not yet been determined.

A New Jersey law enacted in 2016 requires state pension funds to withdraw investments from any company that boycotts the goods, products, or businesses of Israel or companies operating in Israel or territories occupied by Israel. The law requires the state to create a blacklist of companies that boycott Israel.

Author(s): Michael Katz

Publication Date: 20 Sept 2021

Publication Site: ai-CIO

CalPERS’ In-House Private Debt Program Is Dead

Link: https://www.ai-cio.com/news/calpers-in-house-private-debt-program-is-dead/

Excerpt:

A plan by the California Public Employees’ Retirement System (CalPERS) to run its own multibillion dollar private debt investment program is dead for now after the state’s Senate Judiciary Committee rejected a bill that would have allowed the pension system to keep borrowers’ closely guarded financial information confidential.

The rejection by the committee last week is a major setback for the $469 billion pension system. CalPERS officials had planned to give out as much as $23 billion to companies seeking loans in the private debt market in an effort to boost financial returns for the system.

A day after the legislative committee’s vote, CalPERS Board Vice President Theresa Taylor asked at a board meeting whether the pension system could create an asset allocation that would allow it to earn its assumed rate of return without the in-house private lending program. Its current rate of return is 6.8%.

CalPERS does not need legislative permission for its investment program, but it needed state lawmakers to carve out an exemption to the state’s public disclosure laws to create the private debt program.

Author(s): Randy Diamond

Publication Date: 19 July 2021

Publication Site: ai-CIO

What’s the Impact of Early Retirements on Plans?

Link: https://www.ai-cio.com/in-focus/shop-talk/whats-the-impact-of-early-retirements-on-plans/

Excerpt:

Take the California State Teachers’ Retirement System (CalSTRS), which in February reported that it had its second-highest year for retirements in 2020, behind the fallout from the Great Recession. The pension fund reported a steep 26% jump in the second half of 2020 from the same time a year before. 

When the pension fund for educators surveyed roughly 500 of these retirees, about 62% said they retired earlier than they planned. More than half said the challenges of teaching during the pandemic pushed them to seek an early out. Still, a CalSTRS spokesperson said this week that the fund does not expect the retirements to have a “material impact” on the funding levels.  

Broadly speaking, any damage from early retirements is going to be “fairly muted,” according to Kevin McLaughlin, head of liability risk management for North America at Insight Investment. 

Author(s): Sarah Min

Publication Date: 1 July 2021

Publication Site: ai-CIO

FBI Said to Seek Evidence of Kickbacks, Bribery at Pennsylvania PSERS

Link: https://www.ai-cio.com/news/fbi-said-to-seek-evidence-of-kickbacks-bribery-at-pennsylvania-psers/

Excerpt:

Subpoenas indicate that the FBI and federal prosecutors are seeking evidence of kickbacks and bribes in an investigation of the $62 billion Pennsylvania Public School Employees’ Retirement System (PSERS)’s misstatement of its 2020 investment performance and its real estate investment in Harrisburg, Pennsylvania, according to The Philadelphia Inquirer.

In December, PSERS’ board of trustees certified the contribution rates for its members. The board was told by its general investment consultant and another firm that the retirement system’s nine-year performance figure was 6.38%, which was just high enough to avoid triggering additional contributions under state law.

……

The court orders reportedly reveal that the FBI and prosecutors are investigating possible “honest services fraud” and wire fraud. Under a 2010 US Supreme Court ruling, federal prosecutors need proof of illegal payments to seek criminal charges against state officials for not providing honest services, the Inquirer reported.

No one at PSERS, including the executives who received subpoenas, has been accused of any wrongdoing.

And according to a report in The Wall Street Journal, PSERS’ board of trustees has spent more than $1 million and counting in its investigation of the reporting error.

Author(s): Michael Katz

Publication Date: 19 May 2021

Publication Site: ai-CIO

The Exxon Vote: Pension Supporters Stay Onboard to Advance Change

https://www.ai-cio.com/news/the-exxon-vote-pension-supporters-stay-onboard-to-advance-change/

Excerpt:

Sticking around and backing dissident board candidates worked. Instead of divesting from Exxon Mobil, the US’s biggest oil company, the nation’s three largest public pension funds pursued a successful strategy of advocating for change, and they just helped elect a pair of outside directors. Expect more of this tack against fossil fuel outfits.  

Running counter to the trend of pension programs dumping fossil fuel stocks, these giant retirement systems—the California Public Employees’ Retirement System (CalPERS), the California State Teachers’ Retirement System (CalSTRS), and the New York State Common Retirement Fund—believe that, in most cases, working from within is the better way to promote change.

They were key players in electing the two outside directors (a third is still up in the air as proxy ballots are counted), along with huge asset managers BlackRock and Vanguard, plus other pension entities such as the Church of England’s program.

Author(s): Larry Light

Publication Date: 1 June 2021

Publication Site: ai-CIO

NY State Pension Commits to $400 Million in Sustainable Investments

Link: https://www.ai-cio.com/news/ny-state-pension-commits-400-million-sustainable-investments/

Excerpt:

The $247.7 billion New York State Common Retirement Fund has committed approximately $400 million to two funds as part of its Sustainable Investments and Climate Solutions (SICS) Program.

The commitments are part of New York State Comptroller Thomas DiNapoli’s climate action plan to lower investment risks from climate change and help shift the pension fund to net-zero greenhouse gas emissions within the next 20 years.

Author(s): Michael Katz

Publication Date: 26 April 2021

Publication Site: ai-CIO

NY State Pension Commits to $400 Million in Sustainable Investments

Link: https://www.ai-cio.com/news/ny-state-pension-commits-400-million-sustainable-investments/

Excerpt:

The $247.7 billion New York State Common Retirement Fund has committed approximately $400 million to two funds as part of its Sustainable Investments and Climate Solutions (SICS) Program.

The commitments are part of New York State Comptroller Thomas DiNapoli’s climate action plan to lower investment risks from climate change and help shift the pension fund to net-zero greenhouse gas emissions within the next 20 years.

“While climate change poses investment risks, it also creates opportunities for the state pension fund to invest in the companies and funds that are best positioned for the low-carbon future,” DiNapoli said in a statement. “The commitments we announced today aim to take advantage of the growth in climate investing and to strengthen our portfolio for the long-term.”

Author(s): Michael Katz

Publication Date: 26 April 2021

Publication Site: ai-CIO

Pandemic Accelerates Social Risks to Investment Portfolios

Link: https://www.ai-cio.com/news/pandemic-accelerates-social-risks-investment-portfolios/

Excerpt:

According to State Street Global Advisors (SSGA)’s annual stewardship report, the COVID-19 pandemic has accelerated the trend of the increasing significance of social risks within environmental, social, and governance (ESG) risk management.

“Insufficient data remains a challenge, but the ‘S’ is undeniably more important than ever to investors and other stakeholders,” according to the report. “As a result, companies are more focused on social issues, which will likely lead to a proliferation in data over the coming years.”

The firm said it is working with the Sustainability Accounting Standards Board (SASB) and others to develop relevant key performance indicators and is refining its approach to social issues such as human capital management.

Author(s): Michael Katz

Publication Date: 29 March 2021

Publication Site: ai-CIO

Funded Levels of Canadian DB Plans Climb to 20-Year High

Link: https://www.ai-cio.com/news/funded-levels-canadian-db-plans-climb-20-year-high/

Excerpt:

Thanks to surging bond prices, Canadian defined benefit (DB) pension plans ended the first quarter of this year at their highest funded levels in more than 20 years, according to Mercer. However, the asset manager and consulting firm warns that the lofty funded positions might not last, depending on the trajectory of interest rates, inflation expectations, and equity market performance.

Mercer’s Pension Health Index, which tracks the solvency ratio of a hypothetical DB pension plan, increased to 124% at the end of March from 114% at the end of 2020. That is the index’s highest level since it was launched in 1999. Meanwhile, the median solvency ratio of the pension plans of Mercer clients was 104% as of the end of March, up from 96% at the end of December.

Long bond yields jumped 77 basis points (bps) during the quarter to lower the plans’ liabilities and more than offset the negative returns reported by many pension funds during the period.

Author(s): Michael Katz

Publication Date: 12 April 2021

Publication Site: ai-CIO

The New Kentucky Investment Chief Just Got a 41% Pay Boost

Link: https://www.ai-cio.com/news/new-kentucky-investment-chief-just-got-41-pay-boost/

Excerpt:

The new investment chief at the Kentucky Public Pensions Authority (KPPA) has received a 41% boost to his base salary. The hike comes after the plan’s board members this week approved a motion to lift the pay ceiling for top investment officials at the retirement system. 

Board members are hoping the compensation changes will help the underfunded pension plan hold on to KPPA CIO Steven Herbert. He started in January at the $20 billion retirement system, just as it is undergoing a complete rebranding and overhaul of its operations. KPPA was formerly known as the Kentucky Retirement Systems. 

Starting this month, Herbert can earn $235,000 annually, not including incentive pay, up from $167,000 per year. Steve M. Willer, the deputy executive director of investments, who is effectively the DCIO, can earn $190,000 per year, up from $165,000 annually. 

Author(s): Sarah Min

Publication Date: 9 April 2021

Publication Site: ai-CIO

Vermont Pension Reform Plan Blasted by State Teachers, Workers

Link: https://www.ai-cio.com/news/vermont-pension-reform-plan-blasted-state-teachers-worker/

Graphic:

Excerpt:

A plan proposed by Vermont lawmakers to bolster the state’s pension systems, which are facing nearly $3 billion in unfunded liabilities, has been resoundingly panned by state teachers and public employees who said they felt abandoned and betrayed.

According to a draft of the pension reform plan released by the state’s House lawmakers, teachers and state employees would be required to pay more in contributions to the fund, stay in the workforce longer, and get less in monthly benefits when they retire. Additionally, cost of living adjustments (COLAs) would apply only to the first $24,000 of the retirement benefit, and to be vested in the program, employees would have to work twice as long—a minimum of 10 years from the current five.

Author(s): Michael Katz

Publication Date: 30 March 2021

Publication Site: ai-CIO

Kentucky Lawmakers Override Pension Bill Veto

Link: https://www.ai-cio.com/news/kentucky-lawmakers-override-pension-bill-veto/

Excerpt:

The GOP-run Kentucky state legislature has overridden Democratic Gov. Andy Beshear’s veto of a pension reform bill that will place new teachers in a hybrid pension plan that incorporates aspects of a defined contribution (DC) and a defined benefit (DB) plan.

Under House Bill 258, new teachers are required to contribute more to their retirement plans than current teachers do, and they will have to work for 30 years instead of 27 to earn their maximum benefits. The new rules will become effective at the beginning of 2022.

The bill had been passed by large majority of both chambers of the legislature earlier this year, with the House passing it by a vote of 68 to 28 and the Senate passing it by a count of 63 to 34. Because the state’s Republicans have a supermajority in both the House and Senate, they didn’t have much difficulty in overriding the veto, which was one of 24 vetoes passed down by Beshear, a Democrat, that were overridden in one day.

Author(s): Michael Katz

Publication Date: 1 April 2021

Publication Site: ai-CIO