California Pension Fund Gun Stock Ban Cost Beneficiaries $11 Million in Returns

Courtesy CalPERS

 

By Elizabeth McGuigan

Earlier this week, the Wall Street Journal captured the political battles being fought behind the scenes of one of the largest public employee pension fund in the country: the California Public Employees’ Retirement System, or CalPERS.

In the article, aptly titled, “Calpers’ Dilemma: Save the World or Make Money?” the author reviews the fund’s choices throughout recent years to sell off and ban purchasing of stocks for controversial companies.

Entire industries have been on the CalPERS blacklist including tobacco and fossil fuels. Of course, gun control activists who have been having little luck in passing irrational legislation, are also targeting pension funds nationwide to urge divestment.

Fiduciary Responsibility

The problem with divestment is that it ties the hands of the pension fund managers, the ones in charge of investing and generating enough of a return to support the retirement of every covered worker. Taking potentially strong investment options off the table at a time when public pensions are underfunded and struggling is a losing proposition for state workers.

The article illustrates this with a chart showing that the existing ban on investing in the manufacturers of firearms that are illegal for sale in California (hint: that’s a lot), has cost the fund $11 million. That’s an expensive political statement to make with other people’s money, especially considering the duty that fund managers have to serve the interests of the workers.

Fortunately, there are rational voices within CalPERS who are willing to take a stand for workers and reject politically motivated investment restrictions. According to the article, the board will be undertaking a review in 2021 of its existing divestment policies.

As an industry, we are devoted to programs that help improve the safety of our communities. If CalPERS needs any information about the strength of the firearms and ammunition industry in the U.S., or what we do to help ensure the safe and legal use of our products, it knows where to find us.

 

Elizabeth McGuigan is Director of Legislative and Policy Research at the National Shooting Sports Foundation. 

comments

  1. avatar Ansel Hazen says:

    Get Woke. Go Broke. 🙂

    1. avatar Ranger Rick says:

      And then go away, bye bye.😂

    2. avatar I Haz A Question says:

      Back in 2010, when the Governator was about to retire as the up-to-that-date worst governor we’ve ever had, and Moonbeam was about to win the election to take his seat, our state firefighter pension fund was about to go broke.

      So what did Moonbeam do his first year in office? In addition to the funding that pension already gets from property taxes and special add-on sales taxes (in response to the 1993-1994 firestorms and Northridge earthquake), he assessed another separate “fee” of $117.50 each home in many areas have to pay. You don’t pay this fee, you don’t get protection when the wildfires come. You think I’m kidding?…stories abound you can look up in which people lost their homes because they were in arrears of such special fees.

      What stinks about this fee is that it’s sent to the exact same address as other formal taxes. It’s all in the wording. A “tax” must be passed by our legislature, but a “fee” can be assessed by a stroke of the Governor’s pen. The address where you send them both even says “Special Fees and Taxes”!!

      When Moonbeam announced this fee in 2011, he openly admitted that it was to help shore up the underfunded pension. Not for additional equipment…not for more firefighters…nope. Simply to lay the next level of the Ponzi scheme that would last through his term as Governor and keep the spotlight off of the underlying problem. One of my older relatives retired a few years ago at the rank of Captain and has a pension that brings in 90% of his former salary for the rest of his life. **AND** he gets additional pay for “consulting services” whenever a major fire breaks out and they ask for his help in the command center.

      I just hit my 25th anniversary with my employer. What did I get? $500 bucks and a cake.

      Geez.

      1. avatar B.D. says:

        Sounds like California. And the Union. Avoid them both like the plague.

        1. avatar I Haz A Question says:

          Oh, I need to clarify…

          That’s not a single fee. It’s an annual bill of $117.50 per year, every year.

      2. avatar neiowa says:

        Subscription/membership based fire protection is not uncommon is many rural parts of the country. Typically vol. FD not Union thugs working for marxist gov FD though.

        1. avatar I Haz A Question says:

          Understood, but we already get taxed for fire services through property and state sales taxes earmarked for such. This is a separate and additional fee specifically (per Gov Brown) to shore up a failing pension system, not to provide actual services.

  2. avatar jwtaylor says:

    CalPERS pays out about $20B a year. Their board might care about missed opportunities from fossil fuels, but none of them will bat an eye at what is essentially $11M rounding error.

    1. avatar barnbwt says:

      I also suspect they’re basically beyond profit and bankruptcy at this point; even if they rammed the plane square into the mountain, they can count on Uncle Sam to cover their ass. So they can afford these sorts of petty games. I mean, compared to the costs they’re toying around with when it comes to ignoring raging Dark Ages plagues mere months away in their biggest urban centers, this is truly trivial. I’m sure if the fund fails to pay out, they’ll simply expropriate property from unpopular people that still have something left in that hellhole.

      1. avatar strych9 says:

        The real question in what you say is something that most people miss. “How long will the current style of governance in California last?”.

        The answer is this: Until people wise up and realize the problems ahead or until reality smashes the state as whole in the face. Either way they can’t go on like this forever. The problem contains it’s own solution.

        As I said elsewhere: If the state requires a bailout then that’s going to come with strings and these morons won’t be allowed to keep doing what they’re doing. If the crisis is, somehow, averted by a change in action then they’ll have realized their error and corrected it. Either way, the correction is coming.

        1. avatar jwtaylor says:

          The strings attached are entirely dependent on timing. If the Governance of the state and CalPERS board were smart, or at least tricky (they are), they would time their announced failure for whenever there was a favorable federal environment for their bailout. CalPERS is the Schrodinger’s cat of public funds. As they are already underfunded by $150B+, they could make that claim of insolvency at any time.
          When the time is right for them, they will sue for terms. Those terms will be a federal bailout from US taxpayers, and no more strings than reporting “oversight”.

        2. avatar strych9 says:

          “When the time is right for them, they will sue for terms. Those terms will be a federal bailout from US taxpayers, and no more strings than reporting “oversight”.”

          It’s a fair point considering that they’ve already basically been caught cooking the books in ways that any private company would have people in prison over.

          That said, if the federal government allows them to “sue for terms” rather than demanding unconditional surrender then whoever is running the country will doom their party for a quarter century or more. No matter how much bullshit spin they might put out now even someone like AOC knows that kind of “no strings” deal for such bad behavior would be political suicide.

          The rest of the country might get forced to pay that bill once but they’re not going to just sit still for such abuse. The overall population will see it as a dangerous precedent and that’s that for whomever is stupid enough to take that bait. As large as Cali is it’s still only a bit more than 10% of the population so it really can’t vote it’s way to a strings free bailout.

          This isn’t really about tax apportionment at that point and while Cali might win one battle legally they’re going to lose the war politically.

        3. avatar jwtaylor says:

          From your lips to God’s ears.

        4. avatar strych9 says:

          I simply don’t see how anyone sells this otherwise. Even the hardcore base of the Democratic party would have troubles.

          To really bail out Cali is, depending on who’s numbers you prefer, $1.5 Trillion to $3.5 Trillion or more. Trillion. Just their infrastructure, not really updated since the 1970’s is more than $700 Billion behind. The state admits to $1.3 Trillion in debt but outside groups looking at this put the number as high as $2.3 Trillion, the outside groups are probably closer to right because the pension obligations are over $1 Trillion themselves.

          Then there’s the schools. Oh, and the off-the-books bond issuances financing debt with debt Chicago style. And we haven’t even gotten to how fucked the cities are which is gonna fall on the state too which means in a bailout it falls on the feds.

          By the time your done bailing out Cali costs, realistically, a minimum of $2.5 Trillion. That’s half the current fedgov revenue for a year and nearly half of what the wars in Iraq and Afghanistan cost to date. All in one shot.

          I just don’t see how Congress sells that to the American people if it’s “string free”. This isn’t a few hundred billion on some pork project. It’s trillions of dollars, possibly a number of trillions more than we really know about thanks to Cali’s bond schemes.

          Maybe I’m wrong but I just don’t see it.

    2. avatar Frank says:

      CalPERS, the State of California, and the USA in general, are in unimaginable debt. The bridge is out up ahead and the fools have the pedal to the metal. Brace yourselves for the inevitable crash. $11 million is nothing to them.

      1. avatar strych9 says:

        The entire debt and deficits of this country are actually manageable over time with a smart strategy and pro-growth policies. Reasonable fiscal restraint and averaging 4% growth would have you back in the black nationwide in about 22 years last I ran the numbers. That’s within the realm of possibility.

        It wouldn’t be fun and everyone would get their proverbial ox gored but it is doable in a purely fiscal sense. It may not be possible politically but from a purely money perspective it’s possible.

        1. avatar Mark N. says:

          That’s not the problem. The problem is that public employees desire raises from time to time (which they rarely get), that the local public entities have no present cash to fund. So the entities instead just kick the can down the road, promising expanded retirement benefits instead of cash now. Consequently, the underfunded liabilities are not static but continue to grow. Add to that, no one can seem to agree exactly how much the actual deficit is, with some estimates three to five times as high as others.

        2. avatar barnbwt says:

          LOL, only 4%, huh? I think it’s more like, our strategy is to hold our nation together longer than the opposition can. Big revolution in China or we go to war, lotta debt goes bye-bye.

        3. avatar strych9 says:

          Yes barn, about 4% annual growth gets it done because 4% year over year on a base of $7 trillion in revenue turns into a fuck-ton of money pretty fast.

          As I said, it wouldn’t be fun or pretty but it’s mathematically doable.

        4. avatar UpInArms says:

          US GDP growth rate hasn’t hit 4% since the tech bubble burst back in 2000, so you’re already in to wishful thinking.

          The GDP is pretty much a phony number now anyway. Since the Great Recession of 2008, most of growth has come from the FIRE sector– finance, insurance, and real estate. In other words, it’s funny-money created through wealth extraction and not wealth creation. It draws cash out of existing assets and it doesn’t create new assets– so it’s not really growth at all. The FIRE sector now accounts for more “growth” than manufacturing.

          So whatever the GDP number is for any particular year since ’08, the real number is probably less than half.

        5. avatar strych9 says:

          Two things:

          First, 4% is a benchmark for the 22 year time span I mentioned. It’s nothing else.

          You can lengthen that time or shorten it with a lower or higher rate or by doing other things as well. (As I noted, I ran that calculation a while ago so you’d have to rerun it for the new numbers which probably add a few years at this point).

          Were you to enact real budget cuts over the course of 30 years you could balance the budget on a much lower growth rate provided that the country maintains that fiscal discipline.

          Secondly, your time frame is short and includes 8 years of pretty poor policy following the worst recession in 60 years. If you look at the average GDP growth for 1930-present it’s +6.44% officially. I would tend to agree that’s some self-congratulation and I would cut that number in half. Which would be 3.22%, which ain’t that far off of 4%. So it’s definitely possible.

    3. avatar uncommon_sense says:

      If California’s state employee pension system pays out $20 billion every year, that means they have something like 300,000 pensioners. When you split $11 million 300,000 ways, that is only about $37 per pensioner. I imagine the overwhelming majority of those pensioners are quite happy giving up $37 last year to “take a stand against firearms”.

      1. avatar SoCalJack says:

        Great point. It’s the principle of it, for the Antis and it’s a small financial impact.

      2. avatar Ron Stowe says:

        I am one of 300,000 and no I would rather see my $37.00 donated to charity.

  3. avatar GetWokeGoBroke says:

    Why hasn’t a class action law suit been filed for fiduciary violations?

    1. avatar Porkchop says:

      State pension plans are not subject to federal pension laws (ERISA) like private pension plans are, so California can make any rules it wants to regarding the scope of the fiduciary duty of the trustees.

      1. avatar Jeremy says:

        Plus it was only $11 million. A lot to you or I, coins under the couch cushion for them

  4. avatar Ron Szybowicz says:

    But that feeling of smug superiority is invaluable!

    1. avatar barnbwt says:

      “This imaginary smug pie tastes terrible” –starving Californians, circa 2030

  5. avatar OBOB says:

    This is how bad the state is right now

    Pick up a U-haul in LA and move to Georgia =5000.00
    do the reverse
    Pick up in Georgia and move to LA same miles and date and times
    1200.00

    LOL

    more moving out, than in

    it will hit a tipping point when one of the big net companies moves out, then it will sink so fast it will be crazy…but darn fun to watch!

    1. avatar Nickel Plated says:

      Kinda like the tolls in f***in’ Jersey. It’s free to enter, but you always have to pay to get out.

      Awful place it is. Why would anyone voluntarily choose to live there? I always thought the metropolitan northeastern part of the state should be handed over to NY and made part of NYC, the rest be given to PA. There is no reason for that godforsaken state to exist.

  6. avatar Gordon in MO says:

    The californicate politicians will protect their sugar daddy billionaires from the wealth confiscation laws that will be passed but everyone else will suffer.

    This is the final step into communism, the government owns and controls everything and everyone. Close the borders to keep people in.

    Maybe we can send our snowflake socialists there to enjoy the socialist nirvana.

  7. avatar Ing says:

    Fuck the progtards and their false dilemma. CalPERS *exists* to make money. That is literally its only purpose: to provide monetarily for its members.

    If they purposefully choose to do something that loses money, that’s malfeasance. But what else would you expect from braindead Marxists?

    The only dilemma I have concerns the best way to cleanse their foul ideology from the body politic like the toxin it is.

    1. avatar Jeremy says:

      The issue is that you cant predict the market. Any stock can be a loser

      1. avatar Ing says:

        Of course. And then there’s losing money that belongs to other people just because it tickles the feelers. Two very different things.

    2. avatar SurfGW says:

      CalPERS is a jobs program. The high taxes provide for retirement, not CalPERS. When CalPERS bought OC bonds in the 90’s and was almost bankrupt, the state paid employees in IOUs and continued paying pensions.

      1. avatar Ing says:

        Does this make their behavior in this situation better or worse? Or does it simply mean the progressives should’ve been tarred and feathered and run out on a rail 40 years ago?

  8. avatar Manny A says:

    Hopefully the 11 million in earnings went to firearms supporters. May their shares eternally climb in value. They are the ones who are truly blessed .

  9. avatar Pete says:

    The best votes are those bought with other people’s money.
    I guess the same can be said about virtue signaling.

  10. avatar Chris T in KY says:

    I’ve said it before and I’ll say it again California is controlled by a powerful homosexual agenda and elected open homosexual leadership. If gay gun owners care about the 2nd Amendment do they care about the pension systems too? Where is the leadership on this issue? Whst about all those powerful homosexuals in high postions of political power???
    Yes, I’m calling out you Gay Gun Owners. And the other 7 million California gun owners.

    I missed you at the protest to save Highbridge Arms the last gun store in San Francisco. You must have been at Tom Ammiano’s (anti gun) gay election Victory party.

    It seems you can get 400,000 gay people to show up in San Francisco to have sex in public at the Folsom Street Fair or any other various gay pride events.

    But you can’t get a hand full to publicly protest for gun civil rights and protect a gun store business from city government tyranny.

    Are you afraid of losing your social position in the gay community if you take part in an empty holster protest as they were conducted in Texas?

  11. avatar Timothy Toroian says:

    Stupid is as stupid does and the people keep electing them!!!! Of course, when you millions of people who aren’t citizens voting you pass horse manure faster than a horse does!

  12. avatar Green Mtn. Boy says:

    Only in Commiefornia.

  13. avatar WI Patriot says:

    “California Pension Fund Gun Stock Ban Cost Beneficiaries $11 Million in Returns”

    Evidently investors/pensioners aren’t all that interested on getting a return on their $$$…

  14. avatar possum "they can take your badzooka,I hunt with landmynes" Fudd says:

    I’m fearful that California is in for a world of hurt.

  15. avatar former water walker says:

    Sorry my sympathy has evaporated for Commiefornia. ILLinois is per capita far worse. Pension BS is too far gone. The new midwest Venezuela😫

  16. avatar SurfGW says:

    $11 million is far less than the fund management fees. It is practically rounding error to the 5th largest economy in the world.
    Wish it was something substantial to illustrate a point, but that is a drop in the ocean that will convince no one.

  17. avatar Adam says:

    I pray that when the CA pension system finally goes broke we have a Republican president and Congress who are brave enough to tell them “No, the rest of the country will not be paying for your failed system.”

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