For US Retirees, Investors Worry Russian Divestment Could Be Another Self-Inflicted Wound

CC BY-SA 3.0 / Coolcaesar / CalPERS headquarters at Lincoln Plaza in SacramentoCalPERS headquarters at Lincoln Plaza in Sacramento.
CalPERS headquarters at Lincoln Plaza in Sacramento. - Sputnik International, 1920, 17.03.2022
While Russian President Vladimir Putin moves to raise benefits like payments to retirees in response to American and European sanctions, pension funds for public employees across the US have taken losses as they move to divest from Russian assets.
Retirees in California, Colorado, Connecticut, Kansas, Illinois, New Jersey, New York, Washington, and other states could soon be facing another financial hit as their elected officials demand public pensions immediately divest from Russian funds or enterprises. But amid the rush to dump Russian holdings, many are quietly questioning whether the perceived moral value of publicly repudiating Russia is worth the hit to retirement accounts.
According to Bloomberg, “a debate is raging inside the California Public Employees’ Retirement System” (CalPERS), the nation’s largest, “over whether it should quickly exit its Russia investments” despite an expected loss of over $300 million.
CalPERS reportedly holds close to a billion dollars in Russian funds currently. Investment in Russian assets is common among pension plans with holdings in index funds, but it’s coming to be seen as a political albatross amid the unprecedented anti-Russia propaganda campaign being carried out in many western nations.
Stolichnaya Vodka - Sputnik International, 1920, 15.03.2022
UK Bans Exports of Luxury Goods to Russia, Slaps Additional Tariff on Imports
In response, the treasuries of states including Connecticut and Pennsylvania have reportedly directed officials to offload assets worth hundreds of millions. And the New York City Teachers' Retirement System voted March 7th to "prudently divest" from its roughly $90 million stake in Russian securities "to ensure the long-term stability of our pension system.”
But elsewhere, alarm bells are ringing as some worry that the fiscal integrity of retirees’ pension plans is becoming secondary to politicians’ desire to appear sufficiently Russophobic. Some, like former Orange County Employees Retirement System chief investment officer Girard Miller, have acknowledged that such decisions aren’t necessarily being taken solely out of a spirit of solidarity with the Ukrainian regime:
“Asset managers for pension funds invested in [Russian] holdings could have some explaining to do at future trustee meetings,” he admitted in an article for
For most states, holdings in Russian assets total less than 1% of their retirement plans’ total investments. In this climate, even those who sympathize with the efforts to resist denazification in Ukraine have noted that efforts to divest from such holdings are likely to do more damage to retirees in the US than wealthy Russians. For those who insist on scoring cheap political points by publicly denouncing Russia, Miller urges patience.
“Nothing that any public pension fund does now will have a meaningful impact on the Russian economy or its leadership. So it’s wiser to play the long game on any major holdings, which still provides opportunities for snappy newspaper headlines, TV sound bites and feel-good constituent letters without selling emotionally at rock bottom.”
Some managers of retirement funds have already begun to take a similarly pragmatic approach.
On Monday, Ginger Sigler, executive director of Oklahoma Police and Pension Retirement System reportedly told McAlester News-Capital that ‘Russian assets [that] pensions continue to hold are essentially worthless, so her system will hold on to them in hopes that they one day recover.’
Despite all the political grandstanding, it still seems that for many, business is business.
To participate in the discussion
log in or register
Заголовок открываемого материала