Schwarzenegger to sign bill that shifts money from Iran
The divestments could potentially lower the state’s long-term return on investment in its pension funds, meaning state taxpayers might have to contribute more through the state general fund, according to analyses by staffers at the funds. If the bill had been in place over the past five years, CalPERS estimates it would have reduced investment returns by at least $725 million. In the past, state pension funds have been required to divest from South Africa in the 1980s and from the Sudan in a bill that took effect this year. Citing financial risk, CalPERS on its own decided to divest from tobacco companies. [email protected] (916)446-6723160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! “California has a long history of leadership and doing what’s right with our investment portfolio,” Schwarzenegger said in a written statement. “Last year, I was proud to sign legislation to divest from the Sudan to take a powerful stand against genocide. I look forward to signing legislation to divest from Iran to take an equally powerful stand against terrorism.” Schwarzenegger was in New York on Monday speaking to the United Nations about global warming. Coincidentally, Iranian President Mahmoud Ahmadinejad is also in New York this week to address the U.N. The boards of the California Public Employees’ Retirement System and the California State Teachers’ Retirement System opposed the bill, saying it could prevent them from making the best investments in the financial interest of state employees and government agencies. CalPERS spokesman Clark McKinley added that the agency believes it can be more effective in persuading corporations to change their policies by exerting influence as a major stockholder, rather than giving up that leverage by divesting from those companies. “Once we sell our stock, we no longer have leverage with the company, so we’ve lost our voice essentially.” Taking a stand against Iran’s ties to terrorism, Gov. Arnold Schwarzenegger said Monday that he intends to sign a bill requiring the state’s pension funds to divest from companies that do business with the country’s energy and defense sectors. Estimates vary on how much money state funds have invested in companies that do business with Iran, but it could run as high as $24 billion. Also, divesting that much stock could cost more than $120 million in expenses such as taxes and commissions. The state’s two major pension funds have vigorously opposed the bill, arguing that it runs counter to their constitutionally mandated financial responsibility to state employees and government agencies. But Schwarzenegger said the state should make a strong statement against terrorism by exerting the financial influence of the nation’s two largest public pension funds.