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Putting the power of pensions to work—for members

If the 2007 financial meltdown proved anything, it’s that those who put short-term gains ahead of long-term investments can inflict a lot of collateral damage—misery that extends well beyond Wall Street. That point is not lost on AFT members who serve as trustees for their pension funds. With help from the AFT, they are shaping responsible choices for the $800 billion in pension assets that members hold.

Much of the help comes through the AFT’s Center for Workers’ Benefits and Capital Strategies. The center spearheaded the 2013 release of “Ranking Asset Managers: A Retirement Security Report on Money Managers for Trustees.” The document breaks new ground by calling out money managers who have been profiting from work with public pension funds but acting behind the scenes to undercut AFT members’ long-term interests—managers who bankroll organizations that pose a threat to retirement security for our members in the public sector.

In a span of weeks, “Ranking Asset Managers” made an impact on the investment community. Two big interests with ties to union investments, Kohlberg Kravis Roberts & Co. (KKR) and Dimensional Fund Advisors, took steps to sever ties with managers who support groups working against public employees. The Show-Me Institute, a Missouri think tank campaigning across the Midwest to end traditional pensions, and the Manhattan Institute, which is fighting for a nonunion public sector workforce, were among the groups called out in the report. The report is available at www.aft.org/pdfs/press/RankingAssetManagers0413.pdf.

“Other firms are in the process of demonstrating support for retirement security” and following the lead of KKR and Dimensional Fund Advisors, says Dan Pedrotty, co-director of the center.

Along with helping trustees sever ties that ultimately benefit foes of the public sector, the center also is shaping the AFT’s proactive voice in the capital markets. It supported the AFT’s leadership in a coalition of unions and pension funds that partnered with former President Bill Clinton and his Clinton Global Initiative to finance construction and repair of public infrastructure, including an energy-efficient retrofitting of AFL-CIO headquarters. “Harnessing the strength of the pension funds of teachers, nurses, firefighters and other workers to rebuild our roads, schools and bridges and create the infrastructure America needs is not just a financially sound investment—it creates jobs, accelerates our economic growth and invests in the future of our nation,” said AFT president Randi Weingarten, who also chairs the AFL-CIO investment committee.

The center provided support when the Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA-CREF) moved this year to adopt a new union-friendly Responsible Contractor Policy dealing with its real estate investments. It’s a trend that bodes well for AFT members across the board, and one that the union and AFT pension fund trustees are poised to lead, says Pedrotty.

AFT trustees “are standing up and holding Wall Street accountable” for managing money wisely and in ways that promote long-term growth and the interests of members and the public, the center director says. “We’re here to support and work with trustees and pension funds.” [Mike Rose]

 Reprinted from the June/July 2013 Public Employee Advocate.