Columbus Dispatch: Call it off

Push to divest pension funds of links to Iran and Sudan is political grandstanding

Columbus Dispatch
Thursday, June 7, 2007

The state legislature should kill an ill-advised plan to force Ohio's public-employees' retirement systems to sell off $500 million in investments with links to Iran and Sudan.

Instead of mandating that the pension boards divest all of the nearly $1.1 billion in investments, Ohio House leaders are asking the funds to voluntarily dispose of half of those investments by the end of the year.

The five pension systems should continue to oppose this idea, regardless of any deals offered by the Republican-led General Assembly.

Although the retirement systems are described as public pensions, the assets aren't public money. The investments belong to public employees and retirees, not to the state or taxpayers. The boards overseeing the investments have a fiduciary responsibility to get the best returns, period. They should not be dabbling in international politics.

State officials have no business interfering in the nation's foreign policy, but if they insist on doing it, then they should do so with public monies instead of money intended for retired public employees.

Enactment of the mandate would be "a mistake of enormous consequence," said Andy Douglas, executive director of the Ohio Civil Service Employees Association. Douglas is a former Ohio Supreme Court justice.

On Tuesday, Ohio House Speaker Jon A. Husted, R-Kettering, gave the pension funds until today to commit to voluntary divestiture. Failure to do so would result in mandates by the legislature.

Pension-plan managers should stick to their guns and rebuff this grandstanding. Proponents are wrapping themselves in the American flag, stoking patriotic emotionalism to push their legislation.

Divesting won't make a dime's worth of difference in how Iran and Sudan conduct their affairs, but it would allow the shortsighted lawmakers to brag about how they got tough with sponsors of terrorism. They'll skip the part about how they put the nest eggs of thousands of Ohioans at risk to do it.

Stripping portfolios of links to Iran and Sudan would be a major endeavor for four funds: the State Teachers Retirement System, Ohio Public Employees Retirement System, Ohio Police and Fire Pension Fund and the School Employees Retirement System. The Ohio State Highway Patrol Retirement System has no such investments.

It would cost millions of dollars to process all the necessary transactions, according to the Ohio Retirement Study Council. U.S. law already bans U.S. companies from doing business in Iran, but, because of globalization, many corporations have overseas partners that operate there.

Dumping investments with connections to Iran could reduce PERS' returns by about $244 million a year, according to an actuarial analysis. The companies with links to Iran or Sudan include Honda, General Electric, Cola-Cola, Boeing, Toyota and Ford.

Economic punishment of rogue nations is a decision that should be made at the federal level. This is not the business of the states.