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Pension policy goes up in smoke
Even after Burns read an eight-minute statement on tobacco-related mortality statistics and the high cost of illness from smoking, the retirement board voted 2-1 to lift a restriction excluding tobacco stocks from its employees' pension portfolio.
"These people are actively in the business of addicting our young folks to a known carcinogen," Burns said of tobacco companies after the meeting. "The link between tobacco and cancer death and the deleterious effect it has on our society is 100 percent clear."
Burns said he quit smoking 40 years ago, but that wasn't the reason he favored a continuation of a tobacco-stock ban he and then-members of the retirement board voted for 12 years ago.
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While each said they had no quarrel with Burns' statistics, Namie cited a report in June from Twin Capital Management that the county's investment restrictions, "particularly the 5 percent initialization restriction on Exxon Mobil and the restriction on tobacco holdings," were responsible for about 30 percent underperformance.
The tobacco stock ban did not apply to the county's mutual funds, so he voted in favor of lifting the ban as a housekeeping item.
"It's about allowing them to choose companies that may have a holding in a tobacco-related business," Maggi said. "We're not telling them to go out and invest in a tobacco farm and grow tobacco."
Washington County taxpayers this year contributed a record $2.4 million to shore up the employees' pension fund. The county had no choice in the matter; it's required by state law.
If the investment funds had performed even a little better, the amount of the taxpayer contribution to the $72 million pension fund would have been smaller, Maggi said.
Michael Shone, president of Peirce Park Group Investment Management Consultants of West Chester, said of the 42 entities his firm represents, Washington County was the only one that had a tobacco-stock ban.
Two members of the retirement board who supported the tobacco stock ban in 1997 were absent from Thursday's meeting.
With two more negative votes, Burns would have prevailed, but Commissioner Diana Irey, reached Thursday afternoon, said, "I would have supported lifting the ban. In talking with other counties, no one else I knew had this in place. What other restrictions or activities do you apply? We opened up a Pandora's box when we put this in place. It was hurting our investment, so I decided to bring it up for another review."
Irey said she is primarily concerned about "what's best for the taxpayer right now. Many taxpayer dollars are going into the pension fund. It's being the best fiscal stewards of this plan. In better economic times, this wasn't an issue."
In May, Irey questioned Geoff Gerber of Twin Capital Management whether the plan would have performed better if the county did not have a tobacco restriction.
Washington County Treasurer Francis King, who missed his first retirement board meeting in 14 years because of a vacation, also would have voted with the majority.
"We have a fiduciary responsibility to invest in the best funds available to the county," King said. He asked how many restrictions should be in place, and noted he had previously questioned whether the county's investments included firms doing business in Iran.
"Nowadays, we're into mutual funds. We have no control in how we invest our funds," King said.
Meanwhile, Shone reported that Washington County's pension investments performed in the top 8 percent of all public plans during the second quarter in an index he monitors.
"If the year ended right now, you'd be ahead by 4 percent," Shone said. "That lowers your contribution."
burns is burnt : 8/21/2009
bracken burns needs to go. washington co pension fund aint capers and as such investment restrictions will have no social policy effect on big tobacco. it will however have an impact on inverstment performance and the continued need for taxpayer subsidy to offset poor investment results. burns start thinking about the taxpayer or your days will be numbered as a commissioner
Are you serious? : 8/21/2009
If my financial advisor would take all tobacco out of my retirement funds for investment, I would fire them!. As a city taxpayer I am already paying .15 percent more to make up for his gross negligence. Gee, Bracken, its a great thing that you think smoking is bad, but instead of hurting employees pension plans, why don't you enforce the non smoking rules in the local restaurants. Its time for you to go. Maybe you can start an ethics department for the government!
What : 8/21/2009
Why is everyone worried about the effect of national government on our rights, when the local governments infringe on people's right much more throught nonsense like this. One small-minded, narrow-visioned person can make horrible decisions for entire groups, and more often than not, are successful. We need to pay more attention to local government and who is elected.
WOW! : 8/21/2009
If this weren't sooooooo stupid, it'd be funny. What about investing in auto companies, whose products kill thousands every year and are poisoning the air we breathe? What about steel companies whose product is used extensively in bullets, shells, armor, etc....products made exclusively for activities where the ultimate goal is death?? What about soft drink companies and snack food companies whose products adversely affect society's overall health (and disproportionately "the children") by making a large (pun intended) contribution to obesity??? Should the county not invest in those, too??? My point is you can find evil in anything if you look deep enough. Burns is a blowhard who likes to grandstand....he needs to go. He's an embarrassment to the county. (And for the record, I do not smoke, do not like it, but do believe smokers are over-vilified and over-taxed in this country.)
The sad thing is... : 8/21/2009
...most of you fools will vote good 'ol boy Bracken back in again.
please! : 8/22/2009
If they can't find any investements that provide returns besides funding an industry whose prodcuts do NOTHING but cause death and disability (unlike your dumb anaolgy about cars and all the rest) then someone needs to find a better investment advisor. Thre are 2773 stocks listed on the NY Stock Exchange -- surely there are better alternatives, purely from a fiduciary perspective, let alone a moral one.
