Turns out, members of California’s public pension don’t like it when the C-suite are activists with other people’s money. The workers expressed their dissatisfaction with pension-fund-activism by firing CEO Priya Mathur and replacing her with Jason Perez. New CEO Perez’s main point of criticism against Mathur’s approach was her focus on “environmental, social and governance investing,” which is a euphemism for using the pension fund’s money to play politics. Perez ran on a platform of refocusing the pension fund on “the agency’s fiduciary duty to maximize investor returns.” Sound familiar?
Paul Atkins reports on Mathur’s defeat in The Wall Street Journal:
The California Public Employees’ Retirement System this month said no thank you to pension-fund activism. Government workers unseated Priya Mathur, the sitting Calpers president. She was defeated by Jason Perez, a police-union official who criticized Ms. Mathur’s focus on environmental, social and governance investing, or ESG. Mr. Perez emphasizes the agency’s fiduciary duty to maximize investor returns.
Calpers represents almost two million California public employees, retirees and families. Yet it mostly makes headlines for its activism, such as divestiture from the tobacco industry. “It’s been used more as a political-action committee than a retirement fund,” said Mr. Perez. “I think the public agency [employees] are just sick of the shenanigans.”
Americans have always invested to achieve personal goals, such as saving for a house or their kids’ college tuition. Some find that an ESG or issue-specific approach to investing accords with their personal philosophies. There is nothing wrong with people investing their own money however they like. But Calpers has a fiduciary duty to California public employees, who rely on it for retirement security.
Hester Peirce, a commissioner of the Securities and Exchange Commission, recently observed, “When a pension-fund manager is making the decision to pursue her moral goals at the risk of financial return, the manager is putting other people’s retirements at risk.” The danger for Calpers is real: In 2016 a consultant found that the fund’s beneficiaries missed up to $3 billion in investment gains from 2001-14. The reason? A divestiture from tobacco holdings for political purposes.
All this happens as Calpers remain underfunded. Worse, its beneficiaries are stuck. They are locked into the system and cannot vote with their feet.
Read more here.
