For Release: September 24, 2008
Contact: Audrey Mullen at (703) 548-1160 or firstname.lastname@example.org
Public Employee Pensions Endangered by State Officials Playing Global Warming Politics, New Report Says
Lobbying for Higher Energy Prices Likely to Harm Already Troubled Pension Funds
Washington, DC - Already at-risk public employee pension funds are being placed at further risk by state officials who are lobbying for global warming regulation and by state officials who are ignoring the risks posed by such regulation, says a new report, "Pensions in Peril: Are State Officials Risking Public Employee Retirement Benefits by Playing Global Warming Politics?," by the National Center for Public Policy Research.
"We concluded that many state officials are placing public employee pension fund assets at risk by lobbying for global warming regulation that is expected to harm the economy and stock market," said report co-author Steve Milloy. "These state officials, many of whose pension funds are already in financial trouble, may be breaching the fiduciary duties owed to public employees and retirees by playing global warming politics," Milloy added.
"Our report shows that public employees and retirees should be concerned about state officials who might be trying to advance their personal political agendas at the expense of retired public employees," said co-author Tom Borelli. "And let's not forget that taxpayers would likely be forced to make up for any pension fund shortfalls," Borelli added.
The report found that:
1. Global warming regulation is a key portfolio risk for state and local pension funds.
2. A substantial minority of state and pension fund administrators (15 states and local governments managing about $1.21 in assets or 45% of all actuarial assets of state and local pension funds) are actively promoting regulation that is likely to adversely impact their portfolios and beneficiaries. These states and local governments include: California, Connecticut, Florida, Illinois, Kentucky, Massachusetts, New Jersey, New York City, New York state, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.
3. While most state and local pension fund administrators are not actively promoting risky global warming regulation, they are not actively opposing it either.
4. State and local pension fund administrators may be breaching their fiduciary obligations to public employee-beneficiaries by promoting or failing to oppose global warming regulation that places portfolio assets at greater risk.
5. This breach of fiduciary duty is particularly serious for those pension fund systems that are underfunded and that depend on robust stock market performance to meet their future obligations. Fourteen pension fund systems among the 15 state and local governments that are promoting global warming regulation are insufficiently funded.
"Four-dollar gasoline has, by itself, just shown us how the economy and stock market are likely to be ravaged by high energy prices," said Milloy.
"It doesn't take much imagination to foresee what will happen to pension fund stock market investments if these state officials get the across the board economy-killing energy price hikes that they are lobbying for," Borelli added.
The report is available at http://www.nationalcenter.org/NPA575.html.