NCPA - National Center for Policy Analysis


April 19, 2005

Union activists and special interest groups are influencing how and where employee pension funds are being invested. As a result, political goals are taking precedent over sound investment decisions, and retirees are getting shortchanged, says the Heritage Foundation.

Some recent examples:

  • The AFL-CIO and other affiliated unions sent letters to more than 100 financial firms threatening to move $400 billion in assets from firms supporting the establishment of personal Social Security accounts.
  • When President Clinton decided to invest 15 percent of the Social Security trust fund into stocks and bonds, a prominent activist told Congress to avoid firms that produced liquor, tobacco, and firearms, among other products.
  • State and local pension funds have fared poorly in the past over their decisions not to invest in South Africa (to protest racial policies) and northern Ireland.

Politically-influenced investments are nothing new, nor are they confined to the United States. In 2004, Canada?s Prime Minister urged that the Canadian Pension Plan be prohibited from investing in companies producing or trading in military weapons, or those with poor environmental and labor practices.

However, decisions based on politics mean avoiding investments in lucrative firms, says Heritage.

Source: David C. John, "Don't Place Stock in Big Labor," Heritage Foundation, April 12, 2005.


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