Legislative study committee deliberates impact of governor's proposal on pension funds
09/01/2016
When Gov. Pence announced an economic development plan that would be partly funded by using $500 million from pension investments, Indiana Public Retirement System’s (INPRS) executive director says it was just a request.
That’s what INPRS Executive Director Steve Russo told a legislative commission that oversees INPRS’ policies and public pension issues at a meeting on Wednesday.
ISTA testified in opposition to the funding mechanism for the plan and expressed concerns that retirement assets of Indiana’s public employees could be influenced by political officials. ISTA told legislators that INPRS should maintain its focus on giving Indiana retirees high returns on their investments and mitigating risks, not worry about meeting investment goals dictated by politicians.
Several legislators on the Committee on Pension Management Oversight were vocally concerned with the precedent of allowing the governor to influence how public employee pension funds are invested.
“Do you feel concerned that the governor may be making this request from a political point of view, rather than an investor point of view,” asked Rep. Dan Forestal (D – Indianapolis).
Earlier in his presentation, when responding to questions on whether other states have done a similar program, Russo explained that other states have tried similar programs with varying results.
Russo confirmed that other states have encountered issues when outside influences had a say in directing investments that have resulted in conflicts of interest. However, he assured legislators such problems would not occur in Indiana.
Rep. David Niezgodski (D – South Bend) expressed doubts about the entire approach of funding Gov. Pence’s proposal. Niezgodski said the program should not be using any pension funds to make investments. Rather, the funding should come from somewhere else entirely.
The legislative committee will continue to review Gov. Pence’s plan, but some committee members seemed, at this time, content with Russo’s explanation that there would be minimal impact to the day-to-day work of INPRS.