INFRASTRUCTURE

STANDARDS FOR PENSION INVESTMENT IN INFRASTRUCTURE

Labor Standards. We encourage pension funds to invest in infrastructure projects that utilize union construction labor and protect the jobs, collective bargaining rights and working conditions of current employees. Certain types of infrastructure are now privately owned and operated. We fully support pension investment in maintaining, improving and/or building these private assets.

With respect to public infrastructure, any investments must ensure that design, inspection, operation and maintenance continue to be performed by public entities and public employees.

Investment Objectives. Infrastructure investments should be designed to provide stable, risk-adjusted returns for public pensions. Private equity infrastructure funds have a poor track record in delivering returns that would justify their fees and their use of leverage. We need a different model. The infrastructure asset class is more appropriately financed through vehicles akin to fixed income instruments, with long-term stable returns, than to private equity funds.

RESOLVED, that the AFT Trustee Council work together to explore structures in which public pension funds together hold majority control of an infrastructure asset, or follow the lead of funds like CalSTRS (California State Teachers’ Retirement System) in adopting an infrastructure consortium with a captive (“insourced”) asset manager.