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Central Pension Fund IUOE Participates in First AFL-CIO Review of Wall Street Pension Products General President Hanley, as a member of the AFL-CIO Executive Council’s Pension Committee, and the professional staff of the Central Pension Fund participated in producing a landmark Investment Product Review unveiled at the Federation’s biennial convention in October 1999. The Investment Product Review for the first time analyzed and rated a variety of pension investment products offered by large Wall Street investment management firms that are advertised as being worker-friendly. Not surprisingly, some of the products were found to be worker-friendly in name only, while others were found to be truly responsive to worker issues. Products considered to be worker-friendly were those that provided both professional management of pension assets and collateral benefits to the pension plan participants, their families, employers, unions and communities. One of the labor movement’s most important accomplishments has been the provision of retirement security for America’s working families. Today, worker capital--the assets accumulated in worker pension and retirement savings plans--has grown to more than $6 trillion. Ensuring that workers have a meaningful voice in the management of those assets is one of the most important challenges facing the union movement today. One of AFL-CIO President John Sweeney’s first acts as leader of the Federation was to form the AFL-CIO’s Capital Stewardship Program in 1997. The primary mission of that program is to provide comprehensive research on how union pension assets can be invested to maximize the benefits flowing to workers and minimize the amount of those assets lining the pockets of Wall Street profiteers. In response to the AFL-CIO’s focus on this subject, many investment management companies began marketing to union pension plans a variety of investment products labeled as worker-friendly. The purpose of the Investment Product Review was to analyze these products and separate those with real commitment to worker interests from those that are mere marketing ploys to grab pension money. Trustees of union pension funds take their responsibilities very seriously. As guardians of workers’ retirement savings, they expect competitive returns that are not only sustainable over the long run, but are obtained in ways that respect whose money it is. While demanding that pension assets be invested solely in the best interests of the plans’ participants and beneficiaries, trustees know that high quality investments can produce competitive, stable and safe returns along with additional benefits for working families and their communities. Examples of such additional benefits are the fostering of fair and enlightened labor relations practices by corporate America; requiring management accountability and sound corporate governance practices; creating and sustaining employment opportunities; and contributing to broad-based economic development in the communities where workers live, work and raise their families. The AFL-CIO’s Investment Product Review analyzed 40 different investment products offered in four different asset classes: Real Estate, Public Equity, Private Capital and International. While the ratings given to the investment products varied widely from Excellent to Unsatisfactory, in every case the Review explained in detail how the products could be improved to increase their ratings. The fact is that Wall Street has always shown a remarkable ability to quickly adapt its products to what the market demands. Now, for the first time, the labor movement is clearly showing that there is a market for investment products that support, rather than undermine, the interests of working families. There is no reason to believe that Wall Street will be any less responsive to this market demand than it has been to any others. The AFL-CIO, the International Union of Operating Engineers and the Central Pension Fund will be watching closely. Originally
published in the International Operating Engineer |