Chris Burnham Commentary in Barron’s: ESG Investing Suffers a Setback in California

A funny thing happened recently in the left-leaning Golden State. In a board election last month, members of the California Public Employees’ Retirement System, or Calpers, the biggest pension fund in the nation, threw out their president and gave ESG investing a bloody nose.

ESG is the increasingly popular asset-management style that applies environmental, social, and governance standards to screen potential investments. Following this approach, an investor might avoid certain stocks or push shareholder proposals to modify corporate behavior. Unfortunately, they often favor hard-to-define social objectives rather than the narrower goal of maximizing shareholder returns.

In the vote, Jason Perez, a sergeant in the Corona, Calif., police department, upset board member Priya Mathur, a 15-year Calpers veteran, who was also board president and a champion of Calpers’ focus on ESG investing. The pension fund runs $351 billion for its 1.9 million members. Because of its size and stature, Calpers is among the most influential institutional investors in the U.S., and its policies are often adopted by other state pension funds.

Perez, who received 57% of the vote to Mathur’s 43%, ran a campaign that criticized her support for Calpers’ use of ESG, which goes back to at least 2012. Perez’s victory didn’t come as a surprise to those who bothered to look at Calpers’ mediocre recent returns. And that’s exactly what members seemed to have done…..

“We are reaching a crescendo of bad fund management meeting unfunded liabilities,” says Christopher Burnham, president of the Institute for Pension Fund Integrity. “Calpers members recognize this and reject those who are playing politics instead of getting the highest rate of return at a reasonable risk.”

Read the full article here.

Chris Burnham Commentary in Fox & Hounds Daily: CalPERS Must Focus on Fiduciary Responsibility, Not Social Issues

Recently California Public Employees’ Retirement System (CalPERS) – whose former board president, Priya Mathur, was discarded as a board member by a landslide vote of 57% to 43% – signed a letter asking the Securities and Exchange Commission (SEC) to develop metrics for requiring listed companies to report on their compliance with environmental, social, and governance (ESG) standards that presumably would be set by the SEC.

What a stick in the eye of the more than one-million beneficiaries of the almost $400 billion pension system, as she unceremoniously departs, after leading an organization that left billions of dollars in out-performance on the table due to pervious political investing.

The role and responsibility of a fiduciary is not to invest with a personal political agenda, nor is it to impose their personal vision on what types of companies to invest in or not, including tobacco, alcohol, gambling, energy, private prisons, and others. For almost 1000 years, fiduciary duty has meant one thing: investing other people’s money for their (retirement) benefit and security.

Read the full story here.

Ken Blackwell Op-Ed in The Toledo Blade: Treasurer candidate playing politics with state funds

The trouble we run into during campaign season is candidates making emotional promises that yield harmful policy. One of the state Treasurer candidates has essentially promised to use state investments as a political tool. This misguided approach is harmful to Ohio’s financial future.

Democratic state Treasurer nominee Rob Richardson said (”Attorney pushes investing changes; Richardson outlines goals,” Oct. 14) he plans to divest state investments in private prison companies to make a statement, even though these companies have proven profitable investments for our state.

Promising divestment from private prison stocks is pandering for votes, and won’t impact how such companies operate or that they exist. The state treasurer must understand that a robust pension fund is the goal and these stocks have delivered. The Public Employees Retirement System of Ohio invests in both of the nation’s two largest prison contractors, the GEO Group and CoreCivic. As of June, 2018, the GEO Group stock owned by the Public Employees system was valued at over $2.5 million, with the investment in CoreCivic stock valued at over $5.5 million. The State Teachers Retirement System of Ohio also owns stock in both companies, to the tune of $5.7 million and nearly $4.9 million, respectively. Both of these companies have seen astronomical growth in share prices since 2016.

Read the full story here.

Press Release: Institute for Pension Fund Integrity Releases Calculator Showing True State of U.S. Public Pension Plans


OCTOBER 16, 2018

Press Release: Institute for Pension Fund Integrity Releases Calculator Showing True State of U.S. Public Pension Plans

Institute for Pension Fund Integrity Seeks to Illuminate Public Pension Unfunded Liability Crisis

Arlington, VA (October 16, 2018) Today, the Institute for Pension Fund Integrity (IPFI) is proud to announce a new tool that reveals the true cost of the unfunded liabilities of the U.S. public pension crisis. After years of unrealistic and overly positive assumptions by plan actuaries and outdated mortality rates, public pensions now face a multi-trillion-dollar underfunding. In order to raise awareness of the seriousness of this issue, IPFI has designed a calculator that gives transparency to unfunded liabilities as you adjust assumed rates of return and the mortality rates of pensioners.

The politicization of public pensions has been consistently growing over the last decades. Between increased movements to allow for the politically-motivated divestment of funds, despite their performance, and plans using unrealistic assumptions that lead to more politically advantageous outcomes, our public pensions are staring down the barrel of more than $6 trillion in debt. What’s worse, is that the debt could be even worse than that if more realistic assumptions are used.

The revolutionary calculator created by IPFI aggregates the data from each state’s Comprehensive Annual Financial Report to display never-before compiled information that allows taxpayers, pensioners, and policymakers to see the impact of changing the core assumptions, even by just 1%.

The IPFI Pension Gap Calculator shows the following:

  • When a user moves the mortality rate calculator, the reduction is applied across the board at every age level and is then used to estimate the additional rise in liabilities. As retirees live longer, the amount of benefits owed to them increases, causing liabilities to rise.
  • What does the unfunded liability look like if the assumed rate of return is lowered? This is where the calculator comes in with the ability to adjust the rate of return from 2% up to 15%. As you lower the assumed rate of return, you will increase the level of unfunded liabilities. Users can watch as the bar graph skyrockets as the module moves closer and closer to 2%.

“The politicization of our public pensions must stop,” said IPFI President Christopher Burnham recently. He continued saying, “Without realistic return and mortality rate calculations, the retirement crisis our nation faces will only grow larger. This calculator allows plan beneficiaries and taxpayers to see the effects of these miscalculations on their own retirement systems in real time.”

IPFI will continue bringing transparency and accountability to the state of our nation’s public pensions, with additional data being added in coming months.

The Pension Gap Calculator is available at, along with a collection of other white papers and resources that show the true state of public pensions in the United States.


The Institute for Pension Fund Integrity seeks to ensure that local, state and federal leaders are held responsible for their choices in investment, led not by political ideation and opinion but instead by fiduciary responsibility. IPFI is a non-partisan, non-profit organization based out of Arlington, Virginia, and spearheaded by former Connecticut State Treasurer Christopher B. Burnham.

IPFI in Finance et Investissement: Tobacco reportedly cost CalPERS $ 3 billion

Are environmental, social and governance (ESG) criteria generating alpha? Not always, says the US Institute for Pension Fund Integrity (IPFI) according to which the institutional manager California Public Employees’ Retirement System (CalPERS) would have lost more than US $ 3 billion in potential returns following its withdrawal from the sector. tobacco in the year 2000.

IPFI considers that the institutional investor’s decision to leave difficult sectors such as tobacco and hydrocarbons is above all of a political nature. In doing so, pension funds would fail in their “fiduciary duty” vis-à-vis their contributors.

“Although CalPERS staff encouraged the board of directors to end its divestment strategy, in 2016 the board voted to renew this ESG investment orientation for political reasons,” says IPFI.

IPFI was created by Christopher Burnham, former vice-president of PIMCO, former state secretary for the state of Connecticut and former deputy secretary-general for management of the United Nations. He is currently head of Cambridge Global Capital, an investment firm in Virginia.

The basic mission

Jacques Lussier is President and Chief Investment Officer of Ipsol Capital, an investment firm for individual and institutional investors.

He explains that there are two approaches to sectors that generate moral or ethical questions: the exclusion or the limitation of the investments reserved for the “best of class” so as to reinforce their weight and to reward their good practices .

In principle, some sectors such as hydrocarbons lend themselves to selective investments in firms with best practices. “With the tobacco companies, it’s almost impossible. This sector is very concentrated and the product is pretty much the same from one company to another, “says Jacques Lussier.

Should pension plans, for ethical or moral reasons, leave this kind of sector where there are no better class?

“The question arises in the case of organizations dedicated to the health and well-being of the population, such as pension funds of hospitals or pharmacy chains,” says the co-author of the book Rational Investing: The Subtleties of Asset Management (New York, Columbia Business School Publishing, 2017).

“We must see if the investments are in agreement or in contradiction with the basic mission of pension funds,” says Jacques Lussier.

Where to invest?

Former economist at the International Monetary Fund and co-founder of the Sustainable Market Strategies research firm, François Boutin-Dufresne considers the question from another angle.

“What did CalPERS do with the money it took out of the tobacco industry? Has it invested in more efficient sectors or companies like PayPal, for example? Studies like IPFI do not say it, “he says.

On the other hand, boards of directors must also consider reputational and regulatory risks.

“Institutional investors have a reputation to defend. At the limit, there is sometimes a price to pay! These investors are also trying to predict the future actions of governments to adapt to them. At one point, the outright ban on tobacco was being considered in some influential circles in California. It had to be taken into account, “says François Boutin-Dufresne.

See the full version of the article here.

IPFI Applauds Corona Police Sgt. Jason Perez on His Election to the CalPERS Board of Administration


FOR IMMEDIATE RELEASE                                                                                            

OCTOBER 12, 2018 

IPFI Applauds Corona Police Sgt. Jason Perez on His Election to the CalPERS Board of Administration

The California Public Employee Retirement System (CalPERS) held board elections last week with Priya Mathur, who also serves as board president, losing to Jason Perez, a sergeant of the Corona Police Department in southern California. Perez campaigned on the premise of prudent pension fund management and responsible investment and was subsequently chosen to represent active public agency members on the CalPERS Board of Administration. IPFI would like to applaud our nation’s largest pension system for electing an official who prioritizes prudent investment strategies over politics. In his campaign, Perez championed the ideas of sound investing and professionalism in management and keeping the political whims of board members away from the livelihood of pensioners.

Throughout his campaign, Perez referenced responsible ESG investing in his platform, stating that the investment strategy should only be employed when investments add to the plan’s fiscal health. This same stance was outlined in our recent IPFI white paper, “ESG Investing for Public Pensions: Does it Add Financial Value?” Like Jason Perez and his campaign, IPFI advocates for ESG when investments prove to be profitable for the pension plan while denouncing ESG investments when pursued for a political agenda.

The Institute for Pension Fund Integrity seeks to bring transparency and accountability to the public pension system. With elected officials like Jason Perez in California, public servants are one step closer to a secure retirement and addressing the more than trillion-dollar unfunded pension liabilities across the United States. At IPFI, we would like to say congratulations to Jason Perez and we hope that he continues to advocate for the prudent management of public pension plans across the state of California.

The Institute for Pension Fund Integrity seeks to ensure that local, state and federal leaders are held responsible for their choices in investment, led not by political ideation and opinion but instead by fiduciary responsibility. IPFI is a non-partisan, non-profit organization based out of Arlington, Virginia, and spearheaded by former Connecticut State Treasurer Christopher B. Burnham.

Firehouse News Op-Ed by Kevin O’Connor: Fire Politics: Protecting Your Future

When someone raises their hand and takes an oath to become a firefighter or EMS professional, they knowingly assume the risks associated with one of the nation’s most dangerous professions. Very few young firefighters think about the future in terms of needing a pension and/or disability benefits.

There are almost 3,000 public sector pension plans across the United States providing retirement and disability benefits to over 350,000 career fire service and EMS employees. While benefits vary widely depending upon jurisdiction, priorities and resources, most firefighters enjoy a defined benefit-style retirement plan. This means that, unlike a 401(k) or IRA, a firefighter is assured a specific, well-earned benefit when they retire, either after a job-ending injury or they simply hang up their gear for the last time. Defined benefit plans afford security and allow our members to retire with dignity and a measure of self-sufficiency in their golden years.

These benefits have never been provided because of a jurisdiction’s largess or their desire to be firefighter-friendly. They are not a “gift” from your employer. Generations of fire service labor leaders have negotiated, lobbied and bargained hard to win our retirement security. In many cases, firefighters have forfeited pay increases to fund their retirement benefits.

Read the full story here. 

ESG Investing For Public Pensions: Does it Add Financial Value?

Environmental, Social, and Governance (ESG) investing is growing in popularity in both the private and
public sectors. The Institute for Pension Fund Integrity (IPFI), which focuses on fighting for fiduciary responsibility in public pension funds, believes that it is important to investigate the merits and potential scope of ESG investment, particularly when it comes to our nation’s public pension systems. IPFI firmly believes that the primary duty of a fiduciary is to ensure the financial stability of the funds with which they are entrusted. Fiduciaries should not be motivated by politics, ideology, or any other extrinsic force….

To read the full white paper and learn more about IPFI’s stance on ESG investing, please click below.

FOR IMMEDIATE RELEASE: ESG Investing for Public Pensions: Does It Add Financial Value?


Molly Hall


 [email protected]

ESG Investing for Public Pensions – Does It Add Financial Value?

Former Connecticut Treasurer and IPFI President, Christopher Burnham, discusses the current state of the pension system with other experts, focusing on the increased use of ESG investment.

Washington, DC – The Institute for Pension Fund Integrity (IPFI) released its latest research on Tuesday, September 25, 2018. In the wake of the Trump Administration’s renewed guidance on environment, social, and governance (ESG) investing in the April 2018 Department of Labor Field Bulletin, IPFI felt it important to analyze the impact of ESG investing on public pensions. While the DOL guidance applies to private sector pensions, ESG investing is growing in popularity in both the private and public sectors, and it is important to understand the role it plays for public pensions.

Public pensions across the country face more than $6 trillion dollars in unfunded liabilities. Therefore, while some investing strategies are seen as more popular than others, it’s important for public pensions to focus on the returns gained to begin closing the gap. In the latest research by IPFI, the organization details how ESG investing differs in the public sector versus in the private sector. ESG has shown to add value to private investments, but in the public sector it ultimately comes down to the question of if ESG investments add financial value. Much of the research is still undecided on the impact of ESG investing on public pensions given the propensity for ESG investments to be made based on political, not financial, decisions. In the public sector, investment decisions should never be made based on the political impact of an investment.

Christopher Burnham, President of IPFI, recently discussed this new research at a panel discussion hosted by the Pepperdine University School of Public Policy. He joined other pensions experts to discuss this and other challenges facing pensions. Other participants included:

  • Kathleen Kennedy Townsend, Director of Retirement Security at the Economic Policy Institute
  • Wayne Winegarden, Senior Fellow in Business and Economics at the Pacific Research Institute
  • Michael Belsky, Executive Director of the Center for Municipal Financial at Harris School of Public Policy at University of Chicago
  • Joshua Gotbaum, Guest Scholar, Economic Studies at Brookings Institute

At the panel, Mr. Burnham said, “ESG investing is valuable when it adds bottom-line performance to a pension. But it’s not the role of our public pension fiduciaries to make decisions based on what they think is good for society. Instead, they must make investment decisions based on one factor, and one factor only: does it add alpha?” This thinking supports IPFI’s other efforts given its goal to keep politics out of the management of public pension funds.

This research and discussion comes as we reflect on the 10 years since the Great Recession. Considering that public pensions were almost 90% funded before the Recession and on average are now 68% funded, the impact of all investment decisions, whether ESG or otherwise, will be felt by retirees for decades to come.


The Institute for Pension Fund Integrity seeks to ensure that local, state and federal leaders are held responsible for their choices in investment, led not by political ideation and opinion but instead by fiduciary responsibility. IPFI is a non-partisan, non-profit organization based out of Arlington, Virginia, and spearheaded by former Connecticut State Treasurer Christopher B. Burnham.


Forbes Column by Chris Burnham: What Does Being A Fiduciary Really Mean?

Thirty-eight years ago this fall, on a parade deck in Quantico, Virginia, my mother pinned on me the gold bars of a new Lieutenant of Marines. From my earliest moments in the Marine Corps, we were inculcated with the motto of the Corps, Semper Fidelis—”Always Faithful.”

That sacred oath, to the U.S. Constitution, to the people of our nation and to my fellow Marines to be faithful, no matter what the hardship or challenge, weather in combat or in peace, is the omnipotent and omnipresent element that continues to bind Marines today, whether serving, released, or retired.

The Latin word, fidelis – “faithful” – however, is not the sole property of the USMC. In fact, 800 years before the founding of the Marine Corps, English law used it as the basis of the word, “fiduciary,” or someone who will faithfully manage the property of warrior knights while they were off fighting, so that when they returned, they could be assured that the integrity of that property was maintained to the best ability of the appointed trustee.

While the hardworking men and women of our state and local governments may not be “fighting,” they are soldiering on to protect our homes and neighborhoods, educate our children, put out fires, administer driving tests, and make our towns, cities, counties and states work.

During their careers, trustees and fiduciaries of public pension funds across the nation are entrusted with their retirement money to ensure the integrity of that “property”—their retirement accounts. Why on earth would these politicians ever make a decision that was not for the specific benefit of the beneficiary?

In 1830, Justice Samuel Putnam of the Massachusetts Supreme Court gave us, in Harvard College vs. Amory, the “Prudent Man Rule,” a standard still enshrined in US law today of how trustees must act. His words, that a trustee must always consider “the probable income as well as the probable safety of the capital to be invested” has become the standard of care required of all fiduciaries.

Nowhere does Putnam say, “and his or her personal political agenda,” or “his or her personal beliefs.” Why then do politicians continue to try and violate what ERISA law applies to all those managing corporate or union pension plans, where the law clearly states, the “duty of fiduciaries (is) to act solely in the interests of the participants and beneficiaries of an employee benefit plan.”

Maybe it is time to take away fiduciary responsibility from our state and local pension managers and the politicians responsible for them, and subject them all to the same ERISA law that corporate and union managers must abide by. Corporate pension plans always outperform pulbic pension plans. Interesting, isn’t it?

If we don’t change the system, we will continue to get dumb and intellectually corrupt politicians making political decisions on investments rather than acting “solely in the interests of the participants and beneficiaries.”

I have been a dedicated public servant for more than 25 years. From 1995-1997, I served as Connecticut’s state treasurer, where I was the sole fiduciary of the $15 billion retirement fund for state employees and teachers, and turned the pension fund around from the worst sta…