The bill passed on Thursday, the deadline for the pension systems to respond to one lawmaker’s offer to kill legislation that would make such divestment mandatory if the systems agreed to give up half of their investments in such companies. The five systems will divest half of their investments by the end of the year, the AP reported.Illinois was the first state to pass legislation requiring public pension funds to divest from Sudan (See Illinois Measure Bars Sudan Investments), with Maine, Connecticut, Oregon, and New Jersey later following suit. Additionally, California, Massachusetts, New York, Vermont, Indiana, Maryland, Colorado, Rhode Island, and Los Angeles either have passed or are considering divestiture legislation as well.
Such pushes by legislators for the funds to divest have not all been met with success. Most recently, the Arkansas Teacher Retirement System balked at pressure from its legislature to divest its interests in companies that operate in Sudan (See Arkansas Teachers’ Fund Turns Down Divestment Proposal ) and California’s mammoth public pension funds have both vowed to fight such legislation (See CalPERS Balks at Iran Divestment Move and CalSTRS Opposes Broad Investment Bans).
Some plan sponsors and pension fund managers alike are questioning whether unloading investments based solely on the fact they have connections with these governments is in the best interest of pension plan participants (See Doing the Right Thing? and Public Pension Fund Divestment: A Fiduciary Risk? ).