Arizona lawmakers shouldn’t be making investment decisions

Listen to this article

Everyone saving for retirement needs certainty. They must trust that their savings are safe, that the professionals entrusted with this vital responsibility are focused on maximizing returns and increasing investment opportunities.

That’s why when it comes to retirement savings and pensions for firefighters, police officers, nurses, teachers, and other public employees, the simplest strategy is the best one: Investment decisions should be made by fiduciaries and investment professionals — not by politicians chasing their own agendas.

But Arizona’s Senate has a proposal to prohibit public entities — the state, counties, cities, schools, the whole shebang — from contracting with any companies that “discriminate” against firearms businesses.

First, that’s the government trying to tell private companies how to do business. That’s a heckuva twist on the idea of free markets.

Second, it cuts the number of companies competing for business with local governments, which will leave fewer reasons for the remaining companies to cut prices to compete. That will cost taxpayers money on everything from office supplies to public bonds to building materials.

Third, it means the companies hired to invest money for public pensions will be judged by lawmakers for something other than their main job, which is to maximize investment returns and build retirement savings for important public employees like police officers, firefighters, and teachers. They’ll be thinking about whether they’re stepping on political toes rather than focusing on making the best investments to take care of retired Arizonans who deserve financial security.

The idea has been vetoed once before. And it still would go to a public vote before it becomes law. But it’s clear that politicians are caught up in the perceived threat of so-called “ESG investing” — where environmental, social, and corporate governance concerns are considered in evaluating pension investments and decisions on public finance and borrowing.

How about worrying about investment returns instead?

Retirement savings and investments are too important for these political games. Our state’s public employees deserve secure futures built on sound investing and less interference from politicians.

No matter which way the political winds blow, it is an investor’s fiduciary duty to prioritize returns for their clients. All investment decisions must be made in the interest of the beneficiaries. Nothing has changed around this.

But the aggressive pursuit of professional asset managers — particularly of the so-called “Big Three:” BlackRock, State Street, and Vanguard by Arizona’s politicians hurts you, me, and all other investors. The price will be paid by taxpayers and public servants in the form of limited returns, higher costs, curbed freedoms, and unnecessary polarization.

Free-market principles and the fiduciary requirements of investment professionals should drive investment decisions for our public employee pensions. For the benefit of future Arizona retirees, the standard should be simple and unburdened by the political trends of the moment.

Pensions are the only source of retirement income for some public employees. Many police, firefighters, and teachers aren’t eligible for Social Security. Continued attacks from politicians and regulators could devastate their public pensions. This political activism can no longer go unchecked. Politicians and regulators must be stopped from limiting choices in investments that lead to less competition, higher prices, and lower returns.

We cannot let politics jeopardize the financial security of current and future retirees. We must keep politics out of our pensions and retirement options and stay focused on savings, investment solutions, maximizing returns, and increasing investment choices for all Americans.

Tim Hill is the Former Director of the International Association of Fire Fighters (IAFF)’ Pension Resources Department. He is the former President of the Professional Fire Fighters of Arizona (PFFA) and Vice President of Phoenix Firefighters Local 493. He is also a retired firefighter in the Phoenix Fire Department.