U.S. public pension funds, legislatures taking steps to divest Russian assets

U.S. public pension funds and the legislative bodies that oversee them are introducing measures to divest their assets from Russian-related investments following the invasion of Ukraine.

The New Jersey State Senate is scheduled to vote Thursday on a bill that would prevent the $98 billion New Jersey Pension Fund, Trenton, from investing in a company "with an equity tie" to Russia or Belarus or any government entity affiliated with these countries, according to the proposed legislation.

The pension fund investment restrictions are part of a broader bill outlining sanctions against Russia and Belarus, which has been used as a staging ground for Russian troops and on Tuesday joined Russia's invasion of Ukraine. The bill was introduced Feb. 28, and was approved by the Senate Budget and Appropriations Committee with a 12-0 vote the same day.

The bill authorizes the Division of Investment, which handles investments for the New Jersey Pension Fund, and the State Investment Council, which governs investing policies by the division, to "take appropriate action to sell, redeem, divest, or withdraw any investment held in violation" of the bill's terms, according to the legislation.

The bill "shall not be construed to require the premature or otherwise imprudent sale, redemption, divestment, or withdrawal of an investment," the legislation said.

Any action by the council and division would be made "after reviewing the recommendations of and consulting with an independent research firm that specializes in global security risk for portfolio determinations selected by the State Treasurer," the bill said.

Information on how much the New Jersey Pension Fund has in Russia- and Belarus-related investments was not immediately available.

The bill also said any person who "engages in investment activity in Russia or Belarus" will be placed on a state Treasury Department list that will prohibit the person from, among other things, having a contract with state agencies, filing or renewing a Public Works Contractor Registration, or receiving an economic development subsidy from the state Economic Development Authority.

The bill also prohibits the state and its subdivisions from "banking with, having or holding stock, debt, or other equity investments of, or maintaining insurance coverage through a policy issued by a financial institution that has an equity tie to the government of Russia or Belarus."

New York City Police Pension Fund trustees voted Tuesday to approve divesting $42 million in Russian securities, citing Russia's invasion of Ukraine.

The $53.6 billion pension fund is one of five pension funds in the $274.7 billion New York City Retirement Systems, and each fund has an independent board of trustees.

The Tuesday vote asked the city Comptroller Brad Lander, the fiduciary of all five pension funds, to execute the divestment strategy. The comptroller's Bureau of Asset Management handles investment for the five pension funds.

"The international community has spoken, and it's clear that the Ukrainian people have been unjustly attacked," said Paul DiGiacomo, president of the Detectives' Endowment Association, in a Tuesday news release issued by Mr. Lander.

"We will do whatever we can to aid Ukraine — and financially hinder those in Russia who wish the country harm," Mr. DiGiacomo said.

Messrs. DiGiacomo and Lander are among the trustees of the police fund.

"New Yorkers, including current and retired police officers, stand in solidarity with Ukraine and are proud to play a role in contributing to cutting President (Vladimir) Putin and his enablers off from global financial markets," Mr. Lander said in the news release.

He noted that the Biden administration has begun to identify "assets of sanctioned individuals and companies that support and enable Putin's actions." When the White House issues it findings, Mr. Lander said he will ask trustees of the various city pension funds to consider divestment.

Heidi Brennan, a spokeswoman for the New York State Teachers' Retirement System, Albany, wrote in an email Tuesday that the $152.4 billion pension system is "closely monitoring to ensure compliance with" Executive Order 14024, issued Feb. 24 by the U.S. Treasury Department's Office of Foreign Assets Control outlining sanctions against certain Russian banks and companies.

The pension system holds $125 million in Russian assets.

Michigan Gov. Gretchen Whitmer announced Tuesday she had sent a letter to Rachael Eubanks, the state's treasurer, calling for the State of Michigan Investment Board to hold a special meeting to divest the funds it oversees from Russia-related investments.

In a news release, Ms. Whitmer included the text of the letter, in which she condemned the Russian invasion of Ukraine as an illegal and destructive war that violates international law.

"The federal government and our international allies and partners have announced significant sanctions targeting Russian financial institutions, state-owned enterprises, and other government-related activities," Ms. Whitmer wrote in the letter. "Michigan supports these national and international sanctions and should align our state-level actions."

The Michigan Department of Treasury's Bureau of Investments oversees the $95.4 billion Michigan Retirement Systems, East Lansing.

Information on how much the retirement system holds in Russian-related investments was not immediately available.

In South Carolina, state Rep. Russell W. Fry introduced a bill Tuesday that would force the South Carolina Retirement System Investment Commission, Columbia, to divest from companies owned in whole or in part by Russia. The commission oversees the investment management of the $39.7 billion South Carolina Retirement System.

Information on how much South Carolina holds in Russian-related investments was not immediately available.