If You Rely on a Pension, Read This

Relying on a pension fund? Know somebody who is? Here’s another sad reason not to trust somebody else with your money.

Fortunately, the answer to this problem is simple.

Across the country, countless workers have been promised a pension.

[ad#Google Adsense 336×280-IA]They’re some of the lucky few.

But there’s a shocking trend sweeping not just the country, but the globe, that should have every pension recipient worried.

New York’s oh-so-bold mayor illustrated the problem when he swung himself onto the bandwagon this week.

“New York City is a global leader when it comes to taking on climate change and reducing our environmental footprint,” he emailed on Tuesday.

“It’s time that our investments catch up – and divestment from coal is where we must start.”

Politics… meet investing.

The mayor is urging his city’s five separate pension funds to sell their $33 million worth of coal investments.

Sadly, he’s not alone.

Just weeks ago, California passed a law pushing its pension fund – the largest in the nation – out of coal. Prior to that, Norway’s government eradicated coal from its sovereign fund. And the trend is likely to grow. After all, Ban Ki-moon, the influential secretary-general of the U.N., recently urged insurers and pension funds to sell their coal stocks and invest in renewable energy sources instead.

It’s not just politicians, though. Several university endowments have gotten out of coal and even tar sands investments.

What’s infuriating is they aren’t doing it because the stocks are no longer sound (and yes, the coal industry has stiff headwinds). It’s purely political.

They are essentially saying to forget the fiduciary duty to the folks depending on those investments… and forget the fact that most pension funds are grossly underperforming their targets… and let’s instead invest in what feels good.

That’s a troubling trend.

We could long debate the negative effects of coal and the troubles of the industry. We could argue these moves may ultimately be good for the planet. But we’re not scientists… and neither are fund managers. We’re investors.

That’s why we can’t help but ask, “what’s next?”

Will governments shun carmakers that sell smog-producing cars? Will they rid their portfolios of biotechs? Gunmakers? Casinos? Defense firms?

Will they change the tax law to force us out of these industries?

As we’ve discussed before, pensions across the planet are in a tough spot. Many will not meet their obligations. It’s because of people-pleasing moves like those we’ve seen over the last six months – the ones that convince us we won’t see the problem get any better anytime soon.

The solution for investors, though, is simple. It’s our mantra at Investment U: Get educated. Know what’s going on and take moves against it.

It’s easy to do. If you’re reading this, you have the technology and skills to track any pension in the country.

You see, every institutional investor – that includes pensions – must regularly tell Uncle Sam what it’s buying and selling. It does that via a Form 13F. And you can track those forms using the SEC’s Edgar site or through a popular private database like WhaleWisdom.

In fact, a quick search of the most recent 13F filings from my home state of Pennsylvania’s pension shows it still owns plenty of coal stocks, despite the political headwinds.

Even if you will never rely on a pension, we urge you to do some digging – see who is buying and who is selling.

If you rely on a pension, track your investments accordingly. It may even make sense to buy shares of the firms your pension managers are selling.

This socially conscious divestiture theme is spreading. And it’s dangerous.

So far, coal has been kicked out of funds that control well over $1 trillion. As the trend gains momentum, it will have a larger impact on individual sectors.

Pay attention to what’s happening and track your investments accordingly. When politics and investing mix, somebody always loses money.

It’s your wealth on the line… and nobody cares more about your money than you do.

Good investing,



Source: Investment U