IPFI Applauds Putting Fiduciary Responsibility Over Politics

November 28, 2018

IPFI Applauds Putting Fiduciary Responsibility Over Politics

IPFI staunchly opposes politically motivated divestment and applauds the Canada Pension Plan Investment Board for refusing to give in to political pressure. 

Washington, DC – The Institute for Pension Fund Integrity (IPFI) would like to congratulate the Canada Pension Plan Investment Board (CPPIB) for refusing to divest its assets from private prison companies. The move comes after political organizers recently put pressure on the board to remove its investments as a form of protest against the immigration policies of the United States Government.

IPFI is strongly against politically motivated divestment. Investment decisions should be made solely on the basis of financial performance and risk, and should never be made for political reasons. Politically motivated acts of divestment are a violation of fiduciary duty and have led to the loss of billions of dollars of income in the past. For example, when the California Public Employees’ Retirement System divested from tobacco stocks in 2003, it was estimated to have cost the fund over $3.5 billion during the ensuing decade.

“Unfortunately, some pension fund trustees believe that their political agenda is more important than their fiduciary responsibility, ” said IPFI Chairman, Christopher Burnham and former Connecticut State Treasurer. “Pension beneficiaries, of which I am one, deserve better. CPPIB made a courageous and correct decision.”

Within the United States, acts of divestment have been occurring within several prominent pension plans. Both the New York City Employees’ Retirement System and the California Teachers’ Retirement System have voted to divest their funds from private prison holdings. These divestment actions follow long political battles and weaken the already underfunded pension funds. For more on this, see the research available on www.ipfiusa.org.

IPFI would like to congratulate CPPIB for choosing to fulfill its fiduciary responsibility instead of giving in to political pressure. Moving forward, the decision by CPPIB should be used as a model of behavior for other public pension funds.