Colorado’s Public Employee Retirement System Warns Against Further Divestment Legislation

The Colorado Legislature should resist efforts to impose more divestment on the Colorado Public Employees’ Retirement Association according to a recent vote of the pension fund’s Board.

Colorado state legislators passed a divestment bill in February 2007, which was considered at the time to be one of the most aggressive mandates for Colorado’s pension funds to maintain a list of those companies that either directly or indirectly help the Sudanese government commit genocide.

According to a news release from the Colorado Public Employees' Association (PERA), the specific concerns of further divestment include:

• Unintended costs such as transaction costs from selling investments, researching replacement investments and the costs of reduced investment returns.
• Violating the fiduciary duty to invest and expend funds for the exclusive benefit of the plan members and beneficiaries. Meaning financial decisions cannot undermine the funded status of the plan.
• Divestment of companies with significant operations in the U.S. and even Colorado could hurt U.S. jobs.
• A divestment could result in a "slippery slope" that makes differentiation among the remaining issues contentious and divisive."
• The retirement association does not have the authority to determine social policy, foreign policy, or any other policy beyond the operation of the retirement system.