More From Eric Dixon at

Support Independent Investigations With Bitcoin:
Send Bitcoin Here: 171GMeYRD7CaY6tkXs8dSTjLbAtFazxhVL

Top 50 Twitter Rank of Worldwide Startup Advisors For Much of 2014
. Go to my professional site for solutions to your legal, business and strategic problems. The only lawyer who is a co-inventor of multiple, allowed-for-grant patents on blockchain technology!!! Blockchain and Digital Currency Protocol Development --
Top Strategic Judgment -- When You Need A Fixer -- Explore Information Protection and Cryptographic Security -- MUST-WIN: JUST DON'T LOSE -- SURVIVE!: Under Investigation? Being Sued? Handling Extreme Stress -- Corporate Issues -- Startup Issues -- Investor Issues -- Contracts To Meet Your Needs -- Opposition Research -- Intellectual Property, Media and Reputation Issues -- Independent, top-notch legal, strategic and personal advice -- Extensive ghostwriting, speechwriting, book writing, issue research, press and crisis management services. Listed by American Bar Association's Law Bloggers (Blawgers). Contact European Union audiences: This site uses a third party site administrator which may use cookies but this site is intended for AMERICAN clients and prospective clients only!

Thursday, March 7, 2013

Pension Funds And Controversial Investments

From time to time, political observers wonder with shock and awe how public employee pension funds stay invested in the stock of companies which sell tobacco, produce toxic chemicals or manufacture guns.

It's actually very simple.  The pension funds are doing their job.

This takes some explanation. It's very simple.  The job of the pension fund manager is to make money.  That is, to protect and grow the investment of the public employees whose defined contributions -- or contributions from another source, in defined benefit plans -- have gone into the fund.  If a pension fund keeps an investment in a tobacco or weapons manufacturer, the fund is doing its one and only job on behalf of its beneficiaries, who are the only people to whom the fund owes any fiduciary or legal duty.

The tricky part is that the funds often project a certain investment rate of return in order to meet outflows to pension fund beneficiaries (retired workers).  This is no easy job, and it's easy to miss your targets and have a fund deficit (that is, outflows or projected future liabilities are outpacing the actual investment returns of the fund).

But the main point here is that the pension fund exists to provide for the retirement of its beneficiaries, the public workers.  It's all about protecting and advancing their financial interest.  

It is most certainly not about making political statements by divesting or selling the stock of companies which might be considered politically incorrect (like tobacco companies).  Although they are public sector workers, fund beneficiaries are not obligated to take political positions in accordance with any elected official.  Especially when those statements would be made and paid for with the money of the public workers.

1 comment:

  1. Authorities should devise a clear framework to safeguard potential investors from these controversial investments.