Colorado's PERA Warns Against Further Divestment Legislation

August 27, 2007 ( - Colorado's public employee retirement system has asked the legislature to avoid further divestment legislation, saying that more mandates would create "a series of unintended but significant consequences."

Colorado state legislators passed a divestment bill in February 2007, which was considered at the time to be one of the most aggressive mandates (See Colorado House Passes Sudan Divestment Bill ) forColorado ‘s pension funds to maintain a list of those companies that either directly or indirectly help the Sudanese government commit genocide.

After an expedited engagement period, the pension funds would be required to divest from those companies that do not change their business practices in Sudan and would be prohibited from future investment in offending companies until the atrocities cease.

According to a news release from the Colorado Public Employees’ Association (PERA), the specific concerns of further divestment include:

  • Unintended costs such as transaction costs from selling investments, researching replacement investments and the costs of reduced investment returns.
  • Violating the fiduciary duty to invest and expend funds for the exclusive benefit of the plan members and beneficiaries. Meaning financial decisions cannot undermine the funded status of the plan.
  • Divestment of companies with significant operations in the U.S. and even Colorado could hurt U.S. jobs.
  • A divestment could result in a “slippery slope” that makes differentiation among the remaining issues contentious and divisive.”
  • The retirement association does not have the authority to determine social policy, foreign policy, or any other policy beyond the operation of the retirement system.

The full divestment statement of the Colorado PERA Board of Trustees is  here .