A Bloomberg article today points out that the Florida teachers pension fund invests in a company that makes AR-15 rifles (many companies do, the AR is a platform with a long ago expired patent not a specific gun). It’s awkward, definitely, and irresistible given the moment. And especially so because is not some random AR copy but the same model apparently used in last Thursday’s school shooting in Florida.
But anyone going through these pension fund investments will find all sorts of stuff like this. If you invest in index funds or mutual funds you may not want to look to closely at what you own either or at least might want to look before you get too outraged about this. And as we’ve discussed here, the average teacher has a lot more private equity and hedge fund exposure than the average American. Pensions are a big source of investment capital. The teachers unions might be a little less sanctimonious about pensions and their business dealings more generally, but none of this is news.
Anyhow everyone is acting shocked even though it’s not that shocking. The last time we heard about the FL teacher pensions fund I think it was because they were invested in a company that privately managed public schools.
The most interesting part of the article is this,
“As fiduciaries, the SBA must act solely in the interest of the participants and beneficiaries,” John Kuczwanski, a spokesman for the agency, said in an emailed statement. “As primarily passive investors, we essentially own the entire market subject to any legal limitations.”
Fair enough, except the American Federation of Teachers pretty clearly pressures asset managers over their political giving as it relates to teacher pensions and teacher collective bargaining. So someone is playing games here.
The bigger scandal is that it takes Florida teachers eight years to vest for a pension (that would be illegal in the private sector) and seven in ten teachers never vest at all. Meanwhile only 11 percent reach the normal retirement age to get a full pension. Other states have similar problems. That’s the pension scandal that ought to be getting headlines.