mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
Green Folly
Deep in the Red, California Pension Fund Pulls Political Stunts

The Manhattan Institute’s Steven Malanga has described the history of California’s major public pension fund as “a three-decade-long transformation from a prudently managed steward of workers’ pensions into a highly politicized advocate for special interests.” The latest evidence: The fund—which faces unfunded liabilities north of $100 billion, and rising—recently announced that it would require companies it invests in to signal their concern for climate change by changing their board composition, even if it cuts into their bottom line. Governing magazine reports:

In an effort to highlight the potential impacts of global warming, the nation’s largest public pension fund is asking corporations to include climate change experts on their governing boards.

On Monday, the investment committee for California Public Employees’ Retirement System (CalPERS) voted to start requiring the corporations it invests in to include people on their boards who have expertise in climate change risk management strategies.

It’s important to remember that CalPERS is investing with taxpayer money, and that it is taxpayers that will be on the hook if and when the size of the shortfall (created by a combination of incompetent investment and union capture of the state political system) becomes to large for the fund to bear. CalPERS’ latest political stunt, like the many that have come before it, foists more risk onto taxpayers—without their consent—for little reason other than to signal its own institutional virtue.

The state legislature should protect Californians from the inept multibillion dollar financial corporation it created by imposing a back-to-the-basics investment policy. Before adding these kinds of bells and whistles to its portfolio, CalPERS should be required to either meet its investment targets for a number of years, or adjust its investment targets and contribution schedules, so that its finances are sound.

The American military commander Joe Stilwell used to say about Generalissimo Chiang Kai-shek that he should spend more time “generaling” and less time “issimoing.” As with the endeavors of the Chinese Nationalist Party, state governance would proceed more smoothly if leaders focused on getting the basic job done (like funding their basic obligations) before taking on gratuitous special projects.

Features Icon
Features
show comments
  • Blackbeard

    ” if leaders focused on getting the basic job done”

    Good luck on that one. On the left it’s virtue signaling all the way down.

  • Olinser

    As with everything else, why should the managers CARE? They aren’t personally liable for any shortfalls. They are impossible to fire. So why should they actually bother doing their actual jobs?

    Until incompetent idiots like this are held personally liable for their failures, nothing will change.

  • tmitsss

    Matt Ridley is available for climate change advice

  • feastfirst

    The only thing that will save Calpers is climate Armageddon. Maybe they should have an investment policy promoting global warming

  • MumuBobby

    So the market was flat last year. Flat so far this year. They are assuming returns of around 7% so you have a hole and what do you do if you’re in California – you make it bigger. Great weather, lousy governance.

  • Dusty Thompson

    Every single member of this crime syndicate should be in prison. The Chicom hack of the Office of Personal Mgt and subsequent EXTORTION is becoming more and more obvious as this Govt goes deeper and deeper into Criminality to protect itself.

  • http://whenfallsthecoliseum.com/author/kwatson/ megapotamus

    Meet its investment targets for a couple years? Retroactively? Shirley, you jest. They’ve been using an 8% or so expected return for all public pensions for fifteen years. There was some midwestern pension fund that squawked out that they were in the Top Ten of public funds in yield last year. Less loudly they reveal that that return was 1.1%. That’s one point one. Corporate pensions and 401Ks have returned more…. or have they? Could it be that the underlying securities are as worthless as negative interest rate bonds? And Social Security is in the same boat; ‘invested’ in no-risk Treasuries, still, the SS fund hits zero in 2024. That’s eight years. As the Silver Surfer said, though in a planetary context….. All you know is at an end. When these make-work pukes from the State and muni payrolls are out in the street I shall laugh. Perhaps I shall laugh from the gutter of said street. Still.

  • Phil Ossiferz Stone

    Good. Let This failed state destroy itself, starting with CalPers, and let every gun control/illegal immigrant/special rights for queers law become so many unfunded mandates. Then let the San Andreas shake the impoverished rubble into the ocean, and let the few wealthy liberal parasites left flee… so we can start over.

    Hey. A guy can dream.

    • Kevin

      They will come for money from the rest of us. If Hillary gets in with a Democratic Congress’s you can pretty much assume all state pensions will be covered by the Feds in perpetuity.

  • Galileo2

    The board and officers of any corporation has a fiduciary responsibility to secure the best financial outcome for the corporations’ investors, no matter how many want the opposite otherwise.

    So, even if they change out the members of the board to be more Greentard…they will face instant legal problems if they openly pursue what the pension funds want them to.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service