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Green Folly
Massachusetts Debates Worst Pensions Idea Yet

Divestment is a buzzword with renewed vigor on the Left these days. First, Harvard students launched a misguided protest demanding the school divest from companies associated with fossil fuel. Now the state of Massachusetts is debating divesting state pension money from that industry. Massachusetts has divested five times before (Iran, Sudan, Tobacco, Northern Ireland, and South Africa), but the scale of state pension investment is much higher for fossil fuel than any of those. Mass Live:

The state has more money invested in fossil fuel companies than in other recent campaigns. According to Downing, fossil fuel companies account for $1.4 billion in investments, or 2.6 percent of the pension fund, which would be divested over a five-year period. (There is still uncertainty over exactly which companies would be targeted by the bill.) Companies doing business with Iran and Sudan each represented less than 0.2 percent of the fund’s assets; tobacco companies represented just under 1 percent.

Massachusetts is the state with the worst pension crisis in the nation. Its pension fund is 60.6 percent funded, compared to a nationwide average of 74 percent. And yet state legislators are seriously considering dumping a huge and profitable investment portfolio at the behest of alarmist greens. If this goes through, pensioners will get shafted even more than they already are. This is a textbook example of putting politics before the best interest of the people, and it might very well be the worst pensions idea we’ve seen yet.

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  • Fat_Man

    I could support restricting defined benefit pension plans from investing in anything but Treasury bonds. They should focus on their obligations and not take risks with their beneficiaries money.

    • Andrew Allison

      And/or Index funds. The problem is that the pols and the greens appear not to care about the obligations of the pension plans to their beneficiaries.

      • Boritz

        Which is why the plans are over-promised and under-funded even with quality investment choices.

  • Tom Scharf

    I vote they politicize every investment, I don’t live there. The more silly they get with investments, the better returns for everyone else.

  • Chris_8304

    The probabilistic nature of the investment returns and the actuarial nature of the pension payments mean that the impact of stupid decisions about managing the pension fund won’t be seen until years in the future. By then, this group of politicians will be safely retired. This is the main reason why public pension funds are in such bad shape.

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