CalPERS staff recommends dropping tobacco investment ban

By: Pensions & Investments

Published: December 12, 2016

CalPERS’ investment staff is recommending that investment restrictions on tobacco-related securities be removed, according to a memo to be presented at the investment committee meeting on Dec. 19.

The memo said staff made the recommendation based on: “CalPERS’ past experience with divestment in terms of its impact on investment performance; CalPERS’ current circumstances as a mature, cash-flow negative pension plan with increasing demands on investment returns to fund benefits; and the inherent difficulty in reconciling divestment — as a form of active investment decision-making that is both static and highly public — with our investment beliefs, our portfolio priorities, or our duties as fiduciaries.”

The investment committee will vote on the recommendation at the Dec. 19 meeting.The potential reinvestment plan follows a report by CalPERS' general consultant, Wilshire Associates, which said excluding tobacco stocks has cost the retirement system more than $3 billion in combined investment gains between 2001, when the stocks were first removed from the portfolio, and June 30.

Anti-smoking advocates have slammed CalPERS for considering the move, noting that CalPERS also provide health benefits for the more than 1 million people covered under the plans.

Original Story Link: http://www.pionline.com/article/20161212/ONLINE/161219974/calpers-staff-recommends-dropping-tobacco-investment-ban