Pension Funds Consider How To Divest From Russia

"Absolutely we need to divest. We just need to figure out how to do this, given the turmoil that is occurring," said state Sen. Kirk Schuring, R-Canton, who leads the Ohio Retirement Study Council, which will discuss divesture at its meeting Thursday.

Selling off investment holdings in Russian companies to show support for Ukraine is easier said than done. The Russian stock market is closed, hindering trading. And Ohio's pension funds have a fiduciary responsibility to manage investments for the best returns.

The School Employees Retirement System put a hold on any new purchases and told investment managers to consider selling assets if a reasonable and prudent opportunity arises.

"The reality however, is that there is currently no market for the sale of Russian securities," said SERS spokesman Tim Barbour.

Holdings in Russian interests held by the five pension systems are:

Ohio Public Employees Retirement System: roughly $110 million, out of a $123 billion portfolio.

State Teachers Retirement System: less than $50 million, or less than 0.05% of its assets.

School Employees Retirement System: $42.1 million, out of a $17.8 billion portfolio.

Ohio Police & Fire Pension Fund: roughly $6.5 million, out of $19 billion portfolio.

Ohio Highway Patrol Retirement System: no direct investments in Russian holdings but has $1.6 million in co-mingled funds.

Ohio Gov. Mike DeWine issued an executive order telling the pension funds to divest. But the systems are independent and forcing them to take action would require a change in state law.

"Our retirement systems are independent trust funds regulated by the Ohio Revised Code," said Schuring, who has been involved in the Ohio Retirement Study Council for 25 years.

State Sen. Niraj Antani, R-Miamisburg, introduced legislation to force divestiture and noted that California, Arkansas, Indiana, Georgia, Pennsylvania, New York, North Carolina and Colorado have all taken steps to divest public investments and or cancel contracts in Russia.

Over the years, Ohio's public pension systems have been fiercely independent in resisting controls on investments. In 2007, then state representative Josh Mandel pushed legislation to require the funds to divest from Iran and Sudan.

The pension systems opposed it, saying it could cost them big money and conflict with their fiduciary responsibilities to manage the investments for the best returns. Legislators and the systems agreed to a compromise that called for voluntary, gradual divestment, and annual reports to the legislature.

Laura Bischoff is a reporter for the USA TODAY Network Ohio Bureau, which serves the Columbus Dispatch, Cincinnati Enquirer, Akron Beacon Journal and 18 other affiliated news organizations across Ohio.