public disclosure | Pension360

Institutional Investors Push Oil Giants to Disclose Climate Change Risks

A coalition of 150 investors – including pension funds from around the world – are calling on oil giants BP and Shell to provide greater transparency regarding the risks that climate change poses to their business models.

Kentucky Lawmakers to Push for Pension Reforms Before Funding Teachers’ System

The Kentucky General Assembly is considering issuing billions of dollars worth of bonds to help fund the state’s Teachers’ Retirement System (KTRS).

But the funding may come with a catch as many lawmakers want to attach strings to the funds, which range anywhere from forcing new transparency requirements on the system to making benefit changes.

From the Courier-Journal:

So far, legislators have pre-filed at least four bills that would alter some aspect of teacher pensions, and leaders from both the House and Senate say any bonding needs to be paired with reforms.

“There is not a lot of enthusiasm for borrowing more money to pay off the KTRS debt without structural changes accompanying that effort,” said Senate Majority Leader Damon Thayer, R-Georgetown.

Thayer said lawmakers need to consider adjustments to employee contributions and cost-of-living increases, along with new policies that promote transparency in the system.

House Speaker Greg Stumbo, who argues that bond proposals have merit under today’s market conditions, likewise favors measures to improve oversight and transparency as part of the overall funding scheme.

“I think to sell it, it needs to be part of the package,” Stumbo, D-Prestonsburg, said.

[…]

McDaniel, R-Latonia, is sponsoring a bill that would require public retirement systems — including KTRS — to disclose more information about use of investment middlemen known as placement agents.

In the House, Rep. Jim Wayne, D-Louisville, has pre-filed legislation that would, among other things, ban the use of placement agents and require KTRS to publicly disclose information about investments and contracts.

Wayne said the bonding proposal makes some fiscal sense if the state can borrow money at a interest rate lower than its investment return.

But he warned that lawmakers can’t trust the system to act in the best interest of retirees without more transparency, and he says the funding problem is better addressed through tax reform.

KTRS manages $17.5 billion in assets.

Newspaper: Kentucky Pension Officials Have “Forgotten Whom They Work For”

Pension360 has covered the push in recent weeks by several Kentucky lawmakers to make the state’s pension system more transparent.

The secrecy surrounding Kentucky’s pension investments is well documented, and the issue has even spurred a lawsuit.

One Kentucky newspaper wrote Tuesday that pension officials have “forgotten whom they work for” – the public.

The Herald-Dispatch editorial board writes:

Apparently, [pension officials] are in sore need of a reminder that they are employed to serve the public and, as such, how they conduct their business should be open to scrutiny by the public.

[…]

Some want to know more about how the pension funds operate. As of now, Kentucky law allows the systems to operate partly shielded from the public. For example, the public is not allowed to know how much is paid out to individual retirees, nor does the systems have to reveal how much they pay out in fees to individual hedge fund managers who are investing the pension money and other external investment advisers. But we do know they are paying out hefty sums, to the tune of $55 million last year to investment management firms.

The public has a right to know both of those aspects of the pension system.

[…]

Private investment companies doing business with governments also must realize who’s paying their fees and that accountability comes with gaining contracts with government-run pension systems. The excuse put forth by Kentucky officials and others about how revealing the investment companies’ contracts would reveal “trade secrets” doesn’t hold up. That argument simply is not sufficient to conceal how much money they are making from taxpayers and the public employees who contribute to the systems. Until that information is revealed, the public has no way to know whether it’s getting its money’s worth from those companies.

A couple of Kentucky lawmakers plan to introduce bills next month that would require the pension systems to use the state’s competitive bidding process, disclosing terms of the deals and the proposed management fees, as well as shed more light on the pension payouts to the state’s lawmakers. All of those requirements would be steps in the right direction and should be put into law.

Read the full piece here.

Newspaper: Kentucky Pension System is Public Business

Pension360 covered the push last week by several Kentucky lawmakers to make the state’s pension system more transparent.

But at least one lawmaker wasn’t on board with those plans. House State Government Committee Chairman Brent Yonts had this to say about his colleagues’ proposals, which included public disclosure of pension benefits, management fees, and other data:

“Frankly, I don’t think that’s the public’s business,” Yonts said. “They have access to the public payroll and salary information. They can theorize about what we’re going to collect in pensions. But the public is not entitled to know every last little thing about us.”

The Lexington-Herald Leader editorial board weighed in on the issue on Wednesday. The newspaper’s stance: public pensions should be public business. From the editorial:

Rep. Brent Yonts, D-Greenville, is certainly right that the public “is not entitled to know every little thing about us.”

We don’t need to know Yonts’ blood pressure or where he gets his hair done, or which, if any, bourbon he likes to sip of an evening.

But taxpayers are entitled to know how much he and every other state employee will receive from our public pension systems.

Yonts, chairman of the House State Government Committee, made his “every little thing” remark while explaining his opposition to two bills — prefiled for the upcoming session — that would increase transparency in the beleaguered public retirement systems.

Specifically, Yonts thinks the public just doesn’t have the right to know how much retirees are drawing in public pension benefits.

“Frankly, I don’t think that’s the public’s business,” he told reporter John Cheves.

It is all the public’s business: How much people draw and how much the retirement systems pay hedge fund managers and other investment advisers.

Right now the largest of these funds, the Kentucky Employees Retirement System, which covers workers in non-hazardous jobs, is at a perilous 21-percent funding level. That means it has only about one in five of the dollars it is obligated to pay out.

This has happened for several reasons, undoubtedly the most important being that governors and the General Assembly have balanced too many budgets by forgoing the state’s annual match to the money paid in by employees. That’s a breach of promise and an unconscionable slap at state workers.

[…]

And, then there’s the $55 million that the retirement systems paid to investment managers with very little disclosure about what we got for that money.

It’s impossible to fix Kentucky’s public pension mess without laying all the cards on the table. How much do the spikers, double-dippers and well-retired lawmakers cost the system? No one knows, or if they do they’re not telling. How are the investment advisers’ fees set and what do we get for them?

Yonts and public employees who say retirement benefits are none of our business should get over it.

Employees are absolutely right that they took jobs and paid into the retirement system on the belief the money would be there.

But taxpayers funded those salaries and will pay the lion’s share of the bill to solve the pension mess. They have the right to know every little thing.

The full editorial can be read here.

New Jersey Anti-Pay-To-Play Bill Passes Senate

The New Jersey Senate on Thursday approved a recently introduced piece of legislation that would tighten rules regarding political donations made by investment firms vying for business from the state’s pension funds.

The bill, called S-2430, passed by a vote of 25–8.