NCPA - National Center for Policy Analysis


September 25, 2008

Already at-risk public employee pension funds are being placed at further risk by state officials who are lobbying for global warming regulation and by state officials who are ignoring the risks posed by such regulation, says a new report by the National Center for Public Policy Research.

Other findings:

  • Global warming regulation is a key portfolio risk for state and local pension funds.
  • A substantial minority of state and pension fund administrators (15 states and local governments managing about $1.21 in assets or 45 percent of all actuarial assets of state and local pension funds) are actively promoting regulation that is likely to adversely impact their portfolios and beneficiaries; these states and local governments include: California, Connecticut, Florida, Illinois, Kentucky, Massachusetts, New Jersey, New York City, New York state, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont and Washington.
  • While most state and local pension fund administrators are not actively promoting risky global warming regulation, they are not actively opposing it either.
  • State and local pension fund administrators may be breaching their fiduciary obligations to public employee-beneficiaries by promoting or failing to oppose global warming regulation that places portfolio assets at greater risk.
  • This breach of fiduciary duty is particularly serious for those pension fund systems that are underfunded and that depend on robust stock market performance to meet their future obligations; 14 pension fund systems among the 15 state and local governments that are promoting global warming regulation are insufficiently funded.

"Four-dollar gasoline has, by itself, just shown us how the economy and stock market are likely to be ravaged by high energy prices," says co-author Steven J. Milloy.

"It doesn't take much imagination to foresee what will happen to pension fund stock market investments if these state officials get the across the board economy-killing energy price hikes that they are lobbying for," adds co-author Thomas Borelli.

Source: Press Release, "Lobbying for Higher Energy Prices Likely to Harm Already Troubled Pension Funds," National Center for Public Policy Research, September 24, 2008; based upon: Steven J. Milloy and Thomas Borelli, "Pensions in Peril: Are State Officials Risking Public Employee Retirement Benefits by Playing Global Warming Politics?" National Center for Public Policy Research, Policy Report No. 575, September 2008.

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