Pension Funds Ride to the U.S. Economy’s Rescue
January 02, 2012
• Imogen Rose-Smith
The two biggest U.S. pension funds aren’t the chattiest of neighbors. Separated by a river in Sacramento, the $225 billion California Public Employees’ Retirement System and the $148 billion California State Teachers’ Retirement System rarely collaborate. But this past September at a New York press conference held by the Clinton Global Initiative, former President Bill Clinton’s foundation, they jointly announced plans to commit billions of dollars to U.S. infrastructure over the next three to five years.
This pledge is part of a bigger investment push by pension funds, government officials and union executives. The objective is a triple bottom line: returns for pension beneficiaries, jobs for U.S. workers—union members in particular—and improvements to the country’s crumbling infrastructure.
CalPERS hopes to invest as much as $5 billion; CalSTRS has earmarked between $1.5 billion and $2 billion. The two funds will look at projects that include retrofitting and greening buildings; rebuilding highways, bridges, tunnels and ports; expediting access to high-speed wireless communications; and exploring clean energy sources. In the words of CalSTRS Investment Committee Chairman Harry Keiley, these are “the kinds of infrastructure projects that will make America great.” CalPERS plans to devote as much as $800 million of its $5 billion total to California-based infrastructure.The infrastructure crisis could be a blessing in disguise for the country’s troubled economy. In 2009 the American Society of Civil Engineers estimated that the U.S. would need $2.2 trillion for roads, ports and pipelines through 2014. America’s 100 biggest public retirement systems had combined assets of $2.7 trillion in the first quarter of 2011,....
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