Updated with correction
Money managers who support causes seen as being opposed to defined benefit pensions were put on the hot seat Thursday by the American Federation of Teachers, which released a list of firms that the union said were “all too eager” to seek investments from pension funds “while simultaneously attacking” fund participants' interests.
AFT represents 1.5 million members who participate in pension plans representing $800 billion in assets, much of which is in defined benefit plans. Its new Retirement Security Privatization Watch List “is about transparency,” said AFT President Randi Weingarten in a statement. “With transparency and disclosure, trustees can make informed decisions about the risks their plans face.”
Firms named include AQR Capital Management, Dimensional Fund Advisors, Elliott Management, K2 Advisors, KKR & Co., S.A.C. Capital, Third Point Capital, Tiger Management and Tudor Investment Corp.
AFT singled out three organizations supported by one or more executives at those firms, either as an officer, board member, or past or current donor. Those organizations are StudentsFirst, which has a policy against defined benefit plans for teachers, Manhattan Institute, which advocates a shift to defined contribution plans for teachers, and Show-Me Institute, which advocates a switch to defined contribution plans for Missouri state employees, according to AFT.
The AFT report, “Ranking Asset Managers: a retirement security report on money managers for trustees,” promises future reports on other political organizations and their donors. The report notes that while pension trustees must use economic criteria as their primary consideration in hiring a manager, they can and should consider other factors, such as a manager's position on collective bargaining or defined benefit pension plans. The report also recommends that pension fund trustees adopt wording in their requests for proposals to force disclosure of such support.
Third Point Capital founder and CEO Daniel Loeb, who was scheduled to address the Council of Institutional Investors' conference in Washington on Thursday, withdrew when it became known that the AFT letter was to be released that day, according a letter Mr. Loeb sent to CII.
See the full report at the American Federation of Teachers website
