Protecting Your Pensions

AFSCME pension leaders strategize against threats facing public retirement systems — and about ways to reform corporate governance.

By Clyde Weiss

MIAMI

The first-ever gathering of AFSCME leaders who serve on public pension boards confronted a pair of daunting challenges: the current assault on California's massive retirement system and its activist board, together with corporate scandals that have reduced the value of invested savings for millions of Americans. AFSCME is leading the charge against both threats.

Attending the two-day conference in December were 55 union leaders, including trustees of 18 state and local public pension systems with combined assets of more than $430 billion. That's roughly half the pension boards that have a sitting AFSCME member. Their mission? To come up with effective ways to protect retirement security.

Among the serious situations facing public employees are federal and state efforts to convert their defined-benefit plans (which provide guaranteed monthly pension checks) into so-called "defined-contribution" schemes. They are similar to the 401(k)s that are subject to the uncertainties inherent in a scandal-plagued stock market.

REFLECTING GOOD. The key to protecting those retirement assets is strong, activist pension boards that use their ownership power to persuade public companies to manage the assets in ways that reflect good corporate citizenship. That means reducing excessive executive pay, permitting shareholders to nominate directors, preventing privatization, protecting the rights of workers and supporting other "good governance" policies (see related story).

A leader in that effort is California's CalPERS, the world's largest public pension fund, with nearly $183 billion in retirement assets. CalPERS' 13-member board includes AFSCME member Priya Mathur of Local 3993 (Council 57).

In one of AFSCME's biggest victories the very week of the Miami conference, Mathur led the CalPERS board to ratify a comprehensive, anti-privatization investment policy — setting the stage for other public funds to follow suit.

But an ominous development in California could sweep across America. Gov. Arnold Schwarzenegger (R) is leading a multi-million-dollar campaign to weaken CalPERS and the benefits it provides through a ballot initiative that would force government workers hired after 2007 into private investment accounts instead of traditional pension plans. The initiative is similar to President Bush's disastrous proposal to privatize Social Security.

During his keynote address, President McEntee asked — and answered — the pertinent question before the pension board members attending the union conference: "What is our plan to protect our pension funds and increase our influence over them? To get as many AFSCME members as possible elected or appointed as fund trustees." That drive has already taken off. Just last year, seven new AFSCME members were elected to pension boards in Ohio, Maryland and New Mexico. Conference participants agreed on the need for more efforts like those. Based on these successes, McEntee urged determination and long-range thinking, telling the conferees to "set your priorities and plan your next steps."