Public employee pension funds are not a tool that politicians can use to signal their virtue. California state politicians haven't yet learned that lesson.
This is shown by their votes to require the California Public Employees' Retirement System and the California State Teachers' Retirement System to divest of any investment vehicles owned by the government of Turkey – but only if Congress sanctions Turkey for its failure to acknowledge the Armenian genocide during World War I.
CalPERS and CalSTRS both opposed the bill, as well they might.
What purpose did the bill serve? Yes, the Armenian genocide was terrible, but a Turkish acknowledgment will not bring the victims back. And the CalPERS and CalSTRS divestiture, if it happens, can have no significant effect on the Turkish economy or the Turkish government.
It is an empty gesture that nevertheless is a danger for the funds because it shows the politicians do not respect the purpose of the assets in the funds – the provision of pensions for California public-sector workers, and do not respect the investment expertise of CalPERS' and CalSTRS' staffs. Further, they might be tempted to interfere with the funds' investments in a more significant way in the future.
It was also a cowardly gesture because the California politicians tied their action to Congress. That way they could share the blame if no action is taken because Congress does not act. If they had the courage of their convictions, the California politicians could simply have ordered the divestiture themselves.
It is a pity public employee plans are not required to invest the assets solely in the interests of the beneficiaries, as private-sector plans are required to do under ERISA.
