Feb 7, 2017

Anti-tobacco policy has cost California pensioners bigly

The California Public Employees' Retirement System, America's largest public pension system, has lost out on nearly $3.7 billion through its 16 year-old decision to divest from tobacco companies, according to new documents.

Background: CalPERS originally agreed to divest from tobacco in 2000 on public health grounds, but continued to allow third-party managers to retain existing positions (a policy that was reversed at the end of 2016).

Impact: Pension advisor Wilshire Associates reports that the cumulative loss of the tobacco divestment policy was $3.68 billion through the end of last June. That is substantially more than the system's divestments in firearms ($7 million loss) or in Iran and Sudan ($293 million gain). The only larger divestment-related loss for CalPERS was in South Africa, which cost the system $4.94 billion.

Context: CalPERS reports around $308 billion in current assets under management.

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