States Look at Pulling Pension Investments From Russia

The state response to Russia's attack on Ukraine could affect hundreds of millions of dollars in some cases, but the sums are modest compared to overall public pension assets.


Route Fifty, Bill Lucia

March 1, 2022

A growing number of state governments are looking at dumping public pension fund investments they have in Russia in response to the country's invasion of Ukraine.

California, Connecticut, Colorado and Illinois are among the states where officials are looking to do so.

While the divestment efforts are meant as a show of solidarity with Ukraine and a rebuke of Russia's attack, the amount of money potentially affected compared to the overall size of the nation's public pension assets is relatively small. And some of the actions would involve legislation and other measures that aren't yet finalized.


Risks with investing in Russia that preceded the war, like corruption, and shortfalls with rule of law and transparency, mean that many pension managers would have been leery of investing heavily in the country in recent years.

"For most public pension funds in the U.S., Russia exposure is probably quite modest," Ash Williams, former executive director and chief investment officer for Florida State Board of Administration, noted during an interview at an event the National Institute on Retirement Security held in Washington, D.C. on Tuesday.

"For a number of good reasons, I think, most institutional investors have not chosen to emphasize exposure to Russia for a long time," he added.

California is the state that has so far identified some of the largest amounts of Russian pension investments among states. But its public employee retirement systems are also the biggest in the U.S. There, state Senate Majority Leader Mike McGuire, a Democrat, said Monday he was leading an effort to draft bipartisan legislation calling for state agencies, including pension funds, to pull their money from Russia. McGuire's office estimated that the state has upwards of $1 billion invested in the country, the bulk of it from pension funds.

"California has unique and remarkable economic power in this circumstance," McGuire said in a statement.

CA Senate Majority Leader Mike McGuire

The California Public Employees' Retirement System and California State Teachers' Retirement System are the nation's largest and second-largest public pension systems, respectively. CalPERs' assets total about $481 billion and CalSTRs, around $320 billion.


CalPERS spokesperson Megan White said in an email that the retirement system holds no Russian bonds or debt and that its holdings are primarily in public equities, with the rest in real estate and a very small piece in private equity. The pension fund's Russian investments total roughly $900 million to $1.1 billion.

White did not respond to questions about whether the pension fund plans to pull its money from those investments, or about whether CalPERS officials had any reaction to the proposal from McGuire. The system's CEO, Marcie Frost, said in a statement that “CalPERS supports the people of Ukraine who are suffering due to what is an unjustified and unprovoked attack" and noted that the retirement fund's Russian holdings amount to less than 1% of its portfolio.

"We are monitoring current events and will take action as appropriate to protect the interests of our members," Frost added.

A CalSTRS spokesman said in an email that the teachers' retirement fund's investments in Russia totaled $171.5 million as of Feb. 28—about 0.053% of its portfolio. "We are following developments and working closely with the governor to ensure our actions are aligned with the state’s position," CalSTRS added in a statement.

Connecticut Treasurer Shawn Wooden said Tuesday that the state's pension funds would move to divest from Russian-owned assets. The state's retirement plans are valued at about $47 billion, his office said, with upwards of $218 million of equity and fixed income investments in Russia as of Feb. 24. "I cannot continue to invest these pension funds in a way that runs counter to the foreign policy and national interests of the United States," Wooden said in a statement.


A spokesman for the Colorado Public Employees' Retirement Association, which has about $8 million in Russian holdings, said in an email on Tuesday that it was "reviewing and preparing to implement" federal mandates aimed at curtailing investment in Russia.


PERA's Russian assets are only about 0.01% of its total portfolio, which is around $61 billion. Of the $8 million, roughly $7.2 million is invested in the Russian state-owned Sberbank, which is among the Russian institutions that the U.S. government has imposed sanctions on.


Pennsylvania's Treasurer Stacy Garrity said Monday that the state would divest about $2.9 million in state investments from Russia. Lawmakers there, including Republican House Majority Leader Kerry Benninghoff, said they were working on drafting legislation to divest Pennsylvania's funds, including pension dollars, from investments connected to the Russian government.


On Tuesday, Chris Santa Maria, board chairman for Pennsylvania's Public School Employees' Retirement System, said he and investment committee chair Jason Davis had asked for a review of the pension fund's exposure to Russia.


The review found that under $300 million, or less than one-half of 1% of the fund's roughly $72 billion in assets, are directly invested in Russia and Belarus, which has aligned itself with Russia in the war.

Santa Maria said that the fund would continue to provide updates to the retirement system's board and to monitor the situation involving Russia closely and indicated that the topic would be discussed at an upcoming board meeting.


Similar discussions were happening in other states. Gov. JB Pritzker's press secretary shared letters that the Illinois governor sent to pension system leaders on Monday night, asking them to explore divestment of Russian assets. South Carolina lawmakers were also teeing up legislation calling for the state to divest from Russia.

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