Modern News

-By Christine Hall CEI.org.

Labor Unions Aim to Roll Back Pension Protections, Ramp Up Political Investments
Pensions Should Invest to Profit Workers – Not Promote Union Politics

Washington, D.C., October 1, 2009—Labor unions are using the pension funds they control to advance political agendas. This may be putting millions of workers’ retirements at risk. The AFL-CIO recommended to the Obama administration to roll back federal guidelines that require private pension plan managers to invest only for purposes of generating benefits for retirees and minimizing risk. A new CEI report calls on policy makers to keep union pension protections in place and to go a step further by adopting similar protections for public pensions.

At issue is the increasing problem of labor unions and others using pension funds to invest for purely political goals. For example, notes report author F. Vincent Vernuccio, the Service Employees International Union has recommended that pension plan managers “consider climate risks and opportunities” and support shareholder resolutions to “encourage companies to reduce their carbon footprint, seize new market opportunities, and ask corporate supplies to disclose ad reduce greenhouse gas emissions and energy use.”

Vernuccio makes the point that, “public pension plans…should adopt strict standards of fiduciary duty and limit their investing to providing benefits and not advocating social causes.”

Even in the case of private pension plans, which have greater protections and are governed by the Employee Retirement Income Security Act (ERISA), activist groups organize efforts to use “Politically Targeted Investments” and proxy actions to advance political and social agendas, says Vernuccio.