Teacher, public pension funds may drop gun firms

ALBANY, N.Y. — From California to New York, teacher and publicworker retirement funds are reconsidering their investments in gun makers and confronting an uncomfortable fact: Their pensions have supported the manufacture of deadly weapons, in some cases the same type of guns used in the Connecticut school shooting.

For years, the gun industry has been a reliable investment, attracting tens of millions of dollars from some of the nation’s largest retirement funds.

But after the bloodbath in Connecticut, investments are under review in at least four states, including two of the most populous, California and New York.

Although the amount involved is relatively small compared with the size of the pension funds, it has raised questions about the social responsibilities of huge retirement systems that invest on behalf of millions of American workers.

“It’s a bad investment to put money behind companies that put military-grade weapons on our streets and refuse to take responsibility for the outcome,” said New York City Public Advocate Bill de Blasio.

New York state Comptroller Thomas DiNapoli, who has sometimes wielded the state’s $150.1 billion pension fund to urge companies to change their practices, is now reviewing nearly $12 million invested in firearms companies, which have seen their stocks plummet since the attack.

The California State Teachers’ Retirement System announced Tuesday that it would also review investments in the national and international firearms business.

That system had invested $600 million in the private equity firm Cerberus Capital Management, which on the same day put up for sale the gun maker known as Freedom Group International, manufacturer of the Bushmaster AR-15 military-style rifle, the weapon Adam Lanza used to kill 26 people at Sandy Hook Elementary School in Newtown, Conn.

The California retirement fund also owns shares of Sturm, Ruger & Co. and Smith & Wesson Holding Corp., two publicly traded gun manufacturers.

The New York State Teachers’ Retirement System holds nearly $3.4 million in Sturm Ruger & Co. and nearly $3 million in Olin Corp, which manufacturers Winchester arms. That’s out of total assets worth $38.1 billion.

In Pennsylvania, the teachers’ pension fund reacted quickly, contacting Cerberus about the Freedom Group even before the equity firm announced it was selling the gun maker.

The Pennsylvania fund has less than $2 million invested in Cerberus, and those holdings will soon be liquidated, an official said. Although the fund has no social investment policy, its board members became concerned after the Connecticut attack.

Some other public fund investors said the tragedy is forcing them to rethink where they put their money.

Matthew Sweeney, spokesman for New York City Comptroller John Liu, said the city is reviewing its holdings and “aggressively exploring all options,” including dumping the investments.

He advises the pension fund that covers city employees other than teachers, including police, firefighters and other city workers.

Connecticut Treasurer Denise Nappier said the state’s $23 billion pension fund includes one link to a weapons manufacturer: investments totaling $900,000 in Alliant Tech Systems, an aerospace defense company that supplies ammunition to law enforcement and commercial customers.

“My interest is ensuring that any company in which Connecticut pension funds are invested conducts its business consistent with our standards for responsible corporate citizenship — which includes considerations of public safety and the wellbeing of our children,” she said in a statement.

Some states — including Georgia, Mississippi, Louisiana, North Dakota and New Jersey — have no gun makers in their pension portfolios or they have little invested. Others, like Tennessee, leave investment decisions to index funds.

And some states are content to leave their investments alone, such as Arkansas and Texas.

In Texas, the teachers’ fund says it has a “small percent” of its $112 billion in firearms manufacturers. Fund spokesman Howard Goldman said it would be difficult if not impossible to fulfill the fund’s obligations “while managing portfolios that reflect the social concerns of all of our shareholders.”