(*This story was updated at 2:40 p.m. on Friday, 3/4/22 at 2:40 p.m. to clarify that SERS has no financial exposure to Belarus)
Officials at the Pennsylvania State Employees Retirement system voted unanimously to divest assets connected to Russia or Belarus as Russia’s war against Ukraine continues to intensify.
The move, which was expected, will result in the pension system dumping approximately $20 million of Russian stocks as part of international index investing and approximately $1.68 million in private equity investments. All told, it amounts to about a fraction of one percent of the nearly $40 million in assets it has to cover the retirements of 239,000 current and former public sector workers, the Capital-Star previously reported.
State Rep. Dan Frankel, D-Allegheny, who sits on the board, confirmed the vote in a Friday statement.
“Our democratic ideals and our fiduciary duty aligned, making our path clear,” Frankel said. “Russia’s actions represent an existential threat around the globe, and I’m proud to use whatever tools we have to stand against them.”
*Frankel said SERS currently does not have financial exposure to Belarus, a Russian ally, which borders Ukraine to its north. The country was used as a staging ground for the invasion, which is now in its second week. The divestment resolution that SERS’ board approved Friday bars any future investment in Belarus, or an other country that supports the Russian invasion. The board also voted to notify investment partners and advisors that future investments in these countries will not be considered, Frankel added.
“Even though our dollar amount is relatively low, this action sends a message to all of our investment partners, some who may have hundreds of billions of dollars of other investments, that Russia’s violent invasion and threat of nuclear weapons threaten all of us,” Frankel said in a statement.
The move by SERS comes just days after Pennsylvania’s teachers’ pension fund unanimously voted to pull between $270 million and $300 million in assets out of Russia and Belarus.
In a statement earlier this week, state Treasurer Stacy Garrity said that after the invasion of Ukraine last week, her office immediately began divesting its holdings in all Russian-based companies, and that the divestment will be complete by the end of business on Monday.
“While these holdings were very minimal, immediate action was necessary to protect Pennsylvania taxpayers and to show our support for Ukraine,” Garrity added.
The Treasury Department is responsible for directly managing about $40 billion in investments, including state administered savings accounts for college, people with disabilities, local governments and nonprofits. A spokesperson said Monday that just $2.9 million of it was invested in Russian companies, mostly in the energy sector, the Capital-Star previously reported.
Last Sunday, the Pennsylvania Liquor Control Board, at the urging of state lawmakers and Gov. Tom Wolf, announced it was pulling the two brands of Russian vodka that were regularly available in Pennsylvania’s roughly 600 state-owned liquor stores. They accounted for just $1.1 million out of $1.7 billion in sales in the past year, the Capital-Star previously reported.
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