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

CalPERS Rejects Reinvesting in Tobacco Again

Link: https://www.ai-cio.com/news/calpers-rejects-reinvesting-tobacco/

Excerpt:

Saying he wanted to boost portfolio returns, California Public Employees’ Retirement System (CalPERS) investment committee member Jason Perez made a second try at reversing the pension plan’s ban on tobacco stocks. But Perez’s proposal was overwhelmingly rejected Monday night.

At a meeting of the CalPERS investment committee, Perez’s new attempt—his first was in March 2019—attracted only one other vote on the 13-member panel, from Margaret Brown. The ban has been in place since 2001.

The $440 billion pension system would have earned an additional $3.6 billion in investment gains if it kept tobacco stocks in its portfolio between Jan. 1, 2001, and June 30, 2020, according to an analysis by Wilshire Associates, a CalPERS general investment consultant.

Author(s): Randy Diamond

Publication Date: 16 March 2021

Publication Site: ai-CIO

The GameStop Woes Keep Plaguing Melvin Capital

Link: https://www.ai-cio.com/news/gamestop-woes-keep-plaguing-melvin-capital/

Excerpt:

Melvin Capital is facing a wave of lawsuits from plaintiffs who allege that the hedge fund tangled up in the GameStop debacle has conspired to restrict trading for retail investors, causing them to lose money. 

The investment firm founded by Gabriel Plotkin disclosed nine legal complaints in its most recent ADV filing, which social media investors on Reddit gleefully discussed at length this week. The complaints were first reported by Institutional Investor.

The suits accuse Melvin Capital and other market leaders of colluding to restrict retail trading in January, when a freeze on individual accounts trading shares of GameStop, AMC, and other so-called “meme” stocks had retail investors and regulators crying foul play. 

Author(s): Sarah Min

Publication Date: 24 March 2021

Publication Site: ai-CIO

Controversy Still Follows CalPERS’ CIO Resignation

Link: https://www.ai-cio.com/news/controversy-still-follows-calpers-cio-resignation/

Excerpt:

Now, a former CalPERS board member and investment officer has filed a lawsuit demanding that the pension system turn over transcripts, recordings, and notes from a closed-door board meeting held on August 17 allegedly to discuss the Meng affair. Meng resigned on August 5.

J.J. Jelincic’s lawsuit, filed on March 8 in Alameda County Superior Court in Northern California, said the board discussed Meng’s resignation at the meeting and violated the state’s open meetings law.

Meanwhile, on Tuesday, the CalPERS board’s Governance Committee is scheduled to discuss and possibly approve a plan that would require the full 13-member pension system board to be notified when a top system official is under internal investigation because of possible wrongdoing.

Author(s): Randy Diamond

Publication Date: 15 March 2021

Publication Site: ai-CIO