Earlier this year, it was reported that Ohio's legislature and pension systems had reached an "innovative" compromise to divest one half of their investments linked to Iran or Sudan. The divestment was to be limited to active international equity and fixed income portfolios with year end 2007 stated as a target date.
Several issues came to our mind: what about the other half of the investments linked to Iran or Sudan? What about the other classes of portfolios? It was in our eyes, the worst kind of half measure. We thought that at best, it would be expensive, time consuming, performance detracting, and totally devoid of even symbolic meaning.
Since then, some of Ohio's pension funds have moved in creative and smart ways to limit the impact of the agreement. Retirees and State Employees have rightly complained that their retirements should not be linked to NATIONAL foreign policy. The State Teachers' Retirement System has undertaken what appears to be a thoughtful study to understand the potential divestment costs to the fund and clarify their fiduciary liability. My favorite part of the draft policy reads: "State Teachers' Retirement System of Ohio would not divest of a restricted security in Iran or Sudan unless a comparable substitute of risk and return, including transactions costs, is available." Nicely done. They also asked the Attorney General to provide a written opinion on any conflict between the draft policy and the board's fiduciary duty.
See a good article on the topic at PlanSponsor.com (free subscription required)
Showing posts with label Ohio. Show all posts
Showing posts with label Ohio. Show all posts
Tuesday, August 28, 2007
Monday, June 11, 2007
Half Measure?
A few brief comments before the link:
1. Why are the votes on Iran and Sudan so frequently linked together? Is it purely convenience? They are two completely separate issues which should be addressed individually.
2. If one of the countries begins to act "properly", does the legislation have to be completely rewritten and re-passed?
3. What sense does it make to "half-divest"? What point does that make? It would seem this approach would dilute the message/punishment by more than half?
Ohio Pension Funds to Dump Shares in Iran and Sudan-linked Companies
June 9, 2007 (PLANSPONSOR.com) - Ohio’s five public pension funds will drop half of their investments in companies that have business links to Sudan and Iran, making it the next in swelling list of states adopting such measures, the Associated Press reported.
The bill passed on Thursday, the deadline for the pension systems to respond to one lawmaker's offer to kill legislation that would make such divestment mandatory if the systems agreed to give up half of their investments in such companies. The five systems will divest half of their investments by the end of the year, the AP reported.
1. Why are the votes on Iran and Sudan so frequently linked together? Is it purely convenience? They are two completely separate issues which should be addressed individually.
2. If one of the countries begins to act "properly", does the legislation have to be completely rewritten and re-passed?
3. What sense does it make to "half-divest"? What point does that make? It would seem this approach would dilute the message/punishment by more than half?
Ohio Pension Funds to Dump Shares in Iran and Sudan-linked Companies
June 9, 2007 (PLANSPONSOR.com) - Ohio’s five public pension funds will drop half of their investments in companies that have business links to Sudan and Iran, making it the next in swelling list of states adopting such measures, the Associated Press reported.
The bill passed on Thursday, the deadline for the pension systems to respond to one lawmaker's offer to kill legislation that would make such divestment mandatory if the systems agreed to give up half of their investments in such companies. The five systems will divest half of their investments by the end of the year, the AP reported.
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