INVESTMENT AND CONTROL OF PUBLIC PENSION ASSETS

WHEREAS, the assets of state and local government pension plans, which exceed $800 billion, represent the deferred wages and the future financial security of public employees; and

WHEREAS, federal laws and regulations applicable to public pension funds require that the assets be used for the exclusive benefit of participants and beneficiaries and that trustees of public pension funds owe a duty of undivided loyalty to the participants; and

WHEREAS, in carrying out their duties under federal laws, trustees may consider factors in addition to return on investment when making investment decisions, including the long-term financial, social and economic impact on the jurisdiction, its employees, citizens and taxpayers; and

WHEREAS, public pension funds have been used to finance mergers, acquisitions hostile takeovers and leveraged buyouts, which often result in layoffs, erosion of the tax base and economic disruption to local communities; and

WHEREAS, some elected officials have attempted, or are attempting, to overhaul the structures and funding mechanism for public pension funds to help balance general government budgets and increase control over the funds by removing the actuarial function from the pension funds to the state:

RESOLVED, that the AFT condemn the recent violations of the integrity of public pension funds; and

RESOLVED, that the AFT reaffirm its position that the assets of public pension funds represent the deferred wages and future economic security of plan participants, belong to the participants, and must be used for the exclusive benefit of participants. Within this framework, plan investments that contribute to the economic health and vitality of state and local governments and their citizens and meet other policy objectives should be considered by trustees. In addition, pension funds should not be used to finance unproductive merger and takeover activities or investments that result in loss of jobs or undermine the local community; and

RESOLVED, that the AFT will promote and support the passage of federal legislation to

• Protect the interest of participants and beneficiaries in public employee retirement systems;

• Require the disclosure and reporting to plan participants and their beneficiaries, employers, employee organizations and the general public financial;

• Provide a federally guaranteed program to promote and protect the investments of nonprofit, institutional investors in certain economically targeted investments, such as affordable housing, protection and improvement of the environment;

• Enact fiduciary and reporting standards for public pension plans similar to the requirements of private plans mandated under the Employee Retirement Income Security Act of 1974 (ERISA):

RESOLVED, that the AFT will promote and support the passage of state and local legislation to:

• Discourage hostile takeovers, junk-bond leveraged buyouts and similar economically wasteful corporate actions;

• Require that boards of trustees of public plans include equal numbers of representatives from plan participants/union and management.

• Require that public funds exercise their rights of ownership by voting their proxies in the interests of plan participants. Public plans that grant proxy voting rights to professional investment management firms shall provide voting guidelines to such firms consistent with those recently approved by the national AFL-CIO; and

RESOLVED, that the AFT oppose attempts by public officials to raid public employee pension funds by diverting contributions, withdrawing "surplus" fund assets or unilaterally assuming the trustees' actuarial responsibilities; and

RESOLVED, that the AFT oppose any ballot initiatives that foster such raiding or takeovers and support ballot initiatives and federal and/or state legislation to prevent such raiding and preserve both the fiscal and actuarial integrity of public pension systems.