HARRISBURG, Pa. (AP) — Pennsylvania’s biggest public pension system will begin to sell off its investments in Russia and Belarus after its board unanimously voted to do so Thursday in light of the Russian invasion of Ukraine.
The $72.5 billion Public School Employees’ Retirement System is one of the nation’s biggest public pension funds. The vote targets what it says are almost $300 million directly invested in Russia and Belarus, which is less than one-half of 1% of the fund’s total assets. Belarus has been a key ally of Russia in its attack on Ukraine.
The board’s motion has a caveat: that divesting must be consistent with the board’s prudent fiduciary duty. But the motion also decreed that the system will make no future investments in Russia or Belarus until it votes to change that policy.
Governors and lawmakers in numerous U.S. states have been taking actions to pull state investments from Russian companies, while encouraging private entities to do the same.
In Pennsylvania, lawmakers have begun drafting legislation to require the state Treasury Department and the state’s three public pension funds to divest Russia-related holdings.
The Treasury Department said it sold off as much of its $2.9 million it had invested in Russian companies as it could.
Divestiture legislation was also being drafted Monday in the House by Majority Leader Kerry Benninghoff, R-Centre, and in the Senate by State Sen. Sharif Street, D-Philadelphia.
“We have a moral obligation to ensure that our public fund investments are not inadvertently supporting those who are engaging in an unprovoked invasion of their democratically elected neighbors,” Benninghoff said in a note to House members.
In a memo to fellow senators, Street said the “aggressive and illegal invasion of Ukraine demands action.”
The State Employees’ Retirement System, which reported almost $36 billion in assets to start 2021, said the fund’s exposure to Russia-related investments amounts to a fraction of 1%. Its board planned to discuss the matter Friday.
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On Thursday Governor Tom Wolf sent letters to the Pennsylvania State Employees’ Retirement System and the Public School Employees’ Retirement System urging them to divest any public pension funds from investments connected to Russia.
“As the events in Ukraine continue to unfold, I am doing what is within my authority to ensure the commonwealth is disengaging in business with Russia. I, along with other leaders throughout the country, have and continue to strongly condemn the unprovoked and unjustified Russian military invasion of the independent country of Ukraine,” Gov. Wolf said. “While I am committed to sign any clean legislation that lands on my desk that would require divestment of public funds in Russian assets, such as the concept that Leader Benninghoff has recently announced, we need to act now where we can. As such, I strongly urge SERS and PSERS to take immediate action to divest any public pension funds from investments connected to Russia. We must do what is within our power to bring an end to the suffering of the people of Ukraine.”
Lawmakers in 2010 required the divestment of investments related to Iran and Sudan.