State law gives responsibility for the investment of PERA’s funds to the PERA Board of Trustees, and the Board opposes efforts to limit our investment program. PERA invests its assets for the sole benefit of our members and believes that the most effective and efficient long-term strategy is to invest in a broad array of asset classes.
The PERA Board’s Statement on Divestment explains their position in full, but states that “divestment is costly and limits PERA’s ability to effectively seek the best risk-adjusted returns to secure the retirement benefits of public servants.”
Click here to read the Board’s full Statement on Divestment.
- We have a duty to provide retirement security for our members. Colorado PERA serves the single purpose of ensuring the retirement security of Colorado’s current and former public employees. In meeting its fiduciary responsibility, PERA seeks to maximize long-term risk-adjusted investment returns. A central component in managing investment risk is diversification. Divestment adversely affects diversification by limiting the investible universe.
- A divestment mandate creates a slippery slope. For instance, in the past several years, advocacy campaigns have encouraged pension funds to divest from tobacco, the nuclear weapons industry, guns, prisons that house migrants on the U.S./Mexico border, universities that requested Title IX waivers toward LGBTQ youth, private prisons, meat companies/factory farms, opioid manufacturers, and other assets. Divesting from any of these would limit PERA’s investment options and could have negative and unintended consequences for PERA’s portfolio.
- Divesting is expensive. Requiring PERA to divest comes with significant costs – including costs to research, sell and replace its fossil fuel investments, opportunity costs from lost investment opportunities, and costs to create new investment strategies.
- Divestment mandates are not effective and PERA believes engagement is much more effective as a method to promote responsible business practices. Divestment mandates are designed to impose economic hardship on the subject companies but divestment often results in assets simply being transferred from one investor to another, with no impact on the company’s financial position. However, engagement has had a real and lasting impact. To make a change, you need a voice, and divestment means leaving the conversation entirely.
Read more about PERA’s approach to investment stewardship here.
Colorado PERA’s commitment to investment stewardship revolves around four key practices for financial sustainability.
We continue to track the status of all PERA-related bills on PERA on the Issues. You can also stay connected with us and others who want to protect retirement security for Colorado’s public employees on the Colorado Retirement Action Center’s Facebook page.
Click here for information on providing public testimony to the Colorado legislature.