Activist investors have been on the rise in recent years, but their latest target on behalf of left wing environmentalists puts every day New Yorkers’ pensions in trouble.

New York state lawmakers are currently considering a proposal offered by state Sen. Liz Krueger that would mandate the state comptroller to begin divesting all state pension funds from energy companies producing coal, oil and natural gas by 2022. With New Yorkers already facing the highest state-imposed tax burden in the nation, and their state pension system confronting $250 billion in unfunded liabilities, it’s shocking that Albany would consider a measure as onerous to taxpayers as the New York State Fossil Fuel Divestment Act.

The state’s retirement fund is currently 92 percent funded, a shortfall of approximately $5,000 per private sector worker. If the divestment movement is successful, the loss from expected growth could reach the trillions in coming decades. New York Comptroller Thomas DiNapoli has come out against the bill. A Democrat and self-avowed environmentalist, DiNapoli is tasked with being the chief financial officer for the state, and now must weigh special interest activism against the creditworthiness of pensions for New York’s police, first responders, and other public employees.

If Krueger’s measure were to become law, the very people that the pension fund is designed to support would be most negatively affected. An arbitrary decision to divest from traditional energy companies will only increase unfunded liability gap, putting stress on the state’s ability to deliver on its promises to public employees.

A recent study conducted by University of Chicago Professor Daniel Fischel found that pension holders would see New York City’s funds shrink by over $100 million annually, and that divestment would have “minimal or no environmental impact.” New York City Employee Retirement System (NYCERS) alone would lose between $41 and $60 million annually; this adds up to nearly $700 billion over the next 50 years. Decreased returns on investment coupled with the ensuing wave of tax increases intended to offset the shortfall would undoubtedly land on the laps of many of the state’s workers. By rejecting this misguided legislation, New York lawmakers will be protecting public employees and workers statewide.

A burgeoning divestment movement is cropping up across the country, and New York is the latest example. Legislators across the country should follow the lead of Comptroller DiNapoli and keep political activism out of the pension system, focusing instead on driving returns that will ensure promises made to state retirees are promises kept.

Read at: http://www.stargazette.com/story/opinion/2017/08/20/yo-political-activism-ny-pensions/104723192/