From John Curry, August 1, 2007
Subject: Dispatch: "..money in the five pensions belongs to private citizens, not to the state"
Pension divestment drive is motivated by profit, not patriotism
Columbus Dispatch, August 1, 2007
Ohio's five public-pension systems have enough responsibility focusing on the best returns for public-service retirees. They shouldn't be worried about whether their portfolios have some second- or third-party connection to unfriendly regimes.
Unfortunately for Ohio's retired public employees, the retirement plans in June caved in to the legislature's pressure and agreed to dispose of about half of nearly $1.1 billion in investments that have some link to Iran and Sudan. The retirement plans accepted the deal after the General Assembly threatened them with a mandate to end all of those investments.
Proponents of divestment talk of the retirement funds as if they are the taxpayers' money. In fact, the pension money belongs to current and retired public employees.
The divestment plan might make lawmakers feel good about standing up to terrorism, but it will have no effect on the behavior of Iran and Sudan. Instead, it could end up costing Ohioans part of their retirement nest eggs because of the costs related to divestment and needless prohibitions on investment planning.
Adding to concern about this misguided policy are documents showing that consultants aiding in the drafting of Ohio's legislation stand to profit from the growing field of "terror-free" investing. One estimate says the transactions to complete the divestment will cost Ohio's pensions $15 million.
Jeff Glasgow, a retired assistant Franklin County prosecutor, used Ohio's public-records law to obtain documents from the irresponsible co-sponsors of the divestiture legislation, Reps. Josh Mandel of Lyndhurst and Shannon Jones of Springboro. The two Republicans were aided in their by money managers, who profit from arranging funds to meet divestment mandates, and by various research groups, such as the conservative Center for Security Policy.
Jones said she didn't consult the outside groups, while Mandel downplayed their role in drafting legislation.
Punishing Iran and Sudan, or any other repressive regime, is the business of the federal government, not state pension plans. The Ohio agreement set a bad precedent and opened the door to demands for other divestments. The regimes in Iran and Sudan are bad actors on the world stage, but what about Syria, Zimbabwe or China, which has an awful human-rights record?
Multinational companies are globally connected as never before, with subsidiaries on every continent. Divestment rules for Ohio's retirement plans are impractical, counterproductive and should be dropped.
Finally, if state politicians want to dabble in foreign affairs, they should do so with their own money. The money in the five pensions belongs to private citizens, not to the state.