Risky tinkering

Divestment proposal is a distraction

The city of Pittsburgh’s pension board should move cautiously in approaching a decision on whether to divest from fossil fuels, guns and for-profit prisons.

Mayor Bill Peduto, a member of the Comprehensive Municipal Pension Trust fund, is pitching the divestment idea. With the pension fund chronically underfunded, the board should have other matters to address rather than this proposal.

The pension board has a duty greater than supporting the mayor’s political agenda. The board has a fiduciary duty to protect pensions funds for retirees from city employment and future retirees.

The combined municipal, police and fire pensions are only at 60.57% of what would be full funding. That situation is not Mr. Peduto’s fault, but his proposal is a distraction.

The mayor has made no secret of his dislike for fossil fuel producers, including natural gas companies. Mr. Peduto is right to abhor gun violence. He is hardly the only politician concerned about problems in private prisons. What’s in question is whether divestment by the city would make any difference. Not likely.

To consider divestment, the board formed a three-member subcommittee in February. The members of that subcommittee would be wise to follow board chairman Ralph Sicuro’s advice to take their time with a recommendation.

Since much of the city’s $813.9 million in pension monies are invested in mutual funds, it might be difficult to divest from a few industries without abandoning a fund that’s performing well. The board’s financial advisers would then need to select a new investment vehicle.

The impact of divestment would be limited further because so little pension money, about 2%, is invested in industries the mayor dislikes.

Keeping the pension fund solvent is the proper role of the pension board — and that remains no simple task. The mayor and the board should avoid tinkering with the funds to make a political statement.