News from STRS re: HB 151: RETIREMENT SYSTEMS RESPOND TO DIVESTMENT PROPOSAL
From STRS, June 8, 2007
Subject: [News] RETIREMENT SYSTEMS RESPOND TO DIVESTMENT PROPOSAL
On June 1, 2007, STRS Ohio sent information regarding Substitute House Bill 151 to our e-mail news service subscribers. This bill requires the state's five retirement systems, including STRS Ohio, to divest of investments in foreign companies doing certain types of business in Iran and Sudan. In our e-mail, we shared that a vote by the Ohio House on the bill was expected on June 5.
However, instead of a vote, the five systems were asked to consider a proposal from Speaker of the House Jon Husted, who was seeking to meet the objectives of the sponsors of Sub. H.B. 151, while attempting to consider the concerns and objections of the retirement systems.
On June 7, the five system directors responded to Speaker Husted via letter which addresses the following points:
• Agreement that the systems oppose terrorism and genocide and share the concerns of the General Assembly about the acts of Iran and Sudan;
• Stating that meeting pension obligations and health care benefits for our members is dependent upon balanced and diversified portfolios;
• Recognizing that investment decisions must be prudent and deliberative and consider quality, cost, risk, return and market conditions;
• Supporting legislative action, modeled after S.B. 133, that would require Boards to develop policies to address divestiture in a manner that would not violate fiduciary duties;
• Committing to work with the respective Boards to develop an investment policy, CONSISTENT WITH FIDUCIARY DUTY that would divest up to 50% of active holdings in foreign companies doing business with Iran and Sudan by the end of 2007, and ultimately divest from all such holdings.
• Agreeing to report regularly to the Ohio Retirement Study Council (ORSC).
Throughout the process, staff and the directors have in their comments to the sponsors, the House committee, the ORSC and the Speaker, held fast to the principle that our fiduciary responsibilities must take precedence over other considerations, such as foreign policy. We have not changed that position. We reiterated with the Speaker, that any divestment could be done only to the extent that the systems avoid incurring major costs and losses. This can only be accomplished by finding other suitable alternative investments offering similar returns, or by moving to more indexed funds, and in concert with market conditions.
STRS Ohio will continue to keep its members apprised of this bill through its e-mail news service and postings on the STRS Ohio Web site.
Subject: [News] RETIREMENT SYSTEMS RESPOND TO DIVESTMENT PROPOSAL
On June 1, 2007, STRS Ohio sent information regarding Substitute House Bill 151 to our e-mail news service subscribers. This bill requires the state's five retirement systems, including STRS Ohio, to divest of investments in foreign companies doing certain types of business in Iran and Sudan. In our e-mail, we shared that a vote by the Ohio House on the bill was expected on June 5.
However, instead of a vote, the five systems were asked to consider a proposal from Speaker of the House Jon Husted, who was seeking to meet the objectives of the sponsors of Sub. H.B. 151, while attempting to consider the concerns and objections of the retirement systems.
On June 7, the five system directors responded to Speaker Husted via letter which addresses the following points:
• Agreement that the systems oppose terrorism and genocide and share the concerns of the General Assembly about the acts of Iran and Sudan;
• Stating that meeting pension obligations and health care benefits for our members is dependent upon balanced and diversified portfolios;
• Recognizing that investment decisions must be prudent and deliberative and consider quality, cost, risk, return and market conditions;
• Supporting legislative action, modeled after S.B. 133, that would require Boards to develop policies to address divestiture in a manner that would not violate fiduciary duties;
• Committing to work with the respective Boards to develop an investment policy, CONSISTENT WITH FIDUCIARY DUTY that would divest up to 50% of active holdings in foreign companies doing business with Iran and Sudan by the end of 2007, and ultimately divest from all such holdings.
• Agreeing to report regularly to the Ohio Retirement Study Council (ORSC).
Throughout the process, staff and the directors have in their comments to the sponsors, the House committee, the ORSC and the Speaker, held fast to the principle that our fiduciary responsibilities must take precedence over other considerations, such as foreign policy. We have not changed that position. We reiterated with the Speaker, that any divestment could be done only to the extent that the systems avoid incurring major costs and losses. This can only be accomplished by finding other suitable alternative investments offering similar returns, or by moving to more indexed funds, and in concert with market conditions.
STRS Ohio will continue to keep its members apprised of this bill through its e-mail news service and postings on the STRS Ohio Web site.
posted by Kathie Bracy at 1:16 AM
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