Pension Watch March 2025: Climate Chaos Bonds, Detroit Pension Bonuses, Anti-Tesla Tantrum

Plus all the other stories that didn't make the headline cut

Apr 04, 2025

A note: Chicago and Illinois-specific pension stories get their own post. Because I have decided that.

The news cycle seems to be 15 seconds long now, forget about 15 minutes, which may seem like my monthly pension news round-up to be rather infrequent.

However, pensions are long-term promises. At least some of the climate risk folks are serious in thinking about long-term risks and targeting long-term promises. (That will be my first section below.)

I think the pace of a monthly round-up helps provide the longer-term view, and allows me to group up some trends.

The Sierra Club Has Its Eye on Oil-Related Bonds

Sierra Club: Explore the Data: State Pensions are Investing in Climate Chaos

“Climate Chaos”?

Is that the focus-group-tested term now?

As the climate crisis deepens, fossil fuel and dirty energy companies show no signs of slowing down their polluting projects. But they can’t do it without help from big investors, including public pensions.
To pay for their polluting projects, dirty energy companies and fossil fuel corporations raise billions of dollars by selling new corporate bonds to investors. Public pensions, which manage the retirement savings of public employees like teachers and firefighters, help fossil fuel companies raise money by buying these bonds, funneling our tax dollars and workers’ hard-earned savings into new refineries, oil wells, pipelines, and polluting power plants.
….
To understand the severity of this problem, the Sierra Club took a look at how much money our public pensions are investing into fossil fuel corporations and other dirty energy companies via their investments in bonds.
Our analysis shows that state pensions are invested in hundreds of controversial companies in dozens of countries, including companies that have ties to:
LNG imports and exports, including Venture Global’s controversial Plaquemines LNG export facility in Louisiana
Utilities across the US that burn coal, including Duke Energy, Berkshire Hathaway, and Dominion Energy
Fracking in the Permian Basin
State energy companies in Qatar, Kazakhstan, France, Chile, and more
Petrochemical companies in China
Controversial pipelines like the Dakota Access Pipeline
….
Why are only bonds, and not shares, shown here?
To stop fossil fuel expansion, we need to stop the influx of money to companies that continue to make new investments in fossil fuels. For energy companies, most money comes from the sale of bonds to investors, loans from banks, and sale of fossil fuel products to customers. These are the biggest avenues to stopping fossil fuel financing.
So, why aren’t stocks (or shares) captured here? In regard to stopping the flow of money to fossil fuel companies, not all investments are created equal. Investing in shares of fossil fuel companies only puts money in the hands of dirty energy companies when the company is selling those shares for the first time. The majority of publicly traded fossil fuel stocks have been in the market for some time, meaning investors are buying and selling to each other. In these sales, no money is going to the fossil fuel companies.
This is why looking at bonds is a much more important avenue for stopping the flow of money to polluting companies. Bonds are a primary way that companies raise money for their continued operation and new projects. If investors stopped buying bonds from companies involved in fossil fuel expansion, it would make it much more difficult for dirty energy companies to build new pipelines or drill new wells.

Ah, they’re getting smarter.

They have a Tableau dashboard one can explore, but they are very limited in the number of pension funds included:

They did include some of the largest public pensions, (that is, Calpers, Calstrs, and a few New York pensions), but … SURS from Illinois? That’s all you could get from Illinois?

It should be interesting to see if they build out this database at all, because it looks like it all comes from Investing in Climate Chaos, which has bonds and equity info for a bunch of different institutional investors, as of May 2024, and that’s it.

I looked at the database really quickly, and there are other public pensions in there — but they’re holding equities more often than not. It could be these are the only U.S. public pension funds (where the data are available) that have bonds in these types of investments. If they looked at stocks, too, they pension fund list would be much longer.

The Sierra Club has a good point of trying to hit them in the bonds, if you’re trying to target divestment campaigns. It would increase the cost of capital, as interest rates on the bonds would get bid up if there were fewer investors bidding on the bonds.

Lots of ifs.

Detroit Retirees to Get a Bonus This Year

Yeah, but they won’t be getting one next year, don’t you think?

7 Mar 2025, Detroit Free Press: Detroit retirees who lost money in the city's bankruptcy now set to get one extra check

City of Detroit retirees, who faced serious cuts to their pensions in Detroit’s bankruptcy more than 10 years ago, received some good news Friday when they learned that they're now expected to receive a bonus check on May 1.
It's uplifting news, some retirees said, as many are still struggling after the city's bankruptcy left them with far less money than they would have received otherwise. It's the first such benefit for retirees since the city exited bankruptcy in 2014.
It doesn't come anywhere close to covering all the losses that retirees faced. But it is welcome news for many, nonetheless.
City of Detroit retirees, like other seniors on a fixed income, are dealing with higher prices after a spike in inflation and remain concerned about their personal financial picture.
….
The current estimate is that some $466 or so will be paid to retirees covered by the General Retirement System and an estimated $653 will be paid to retirees covered by the Detroit Police and Fire Retirement System, according to John Naglick Jr., chief deputy CFO for the city of Detroit and finance director-controller. The exact dollar amount for either check is not known at this time.

I checked out the two Detroit pension systems in the Public Plans Database.

Excuse me — both plans are far from fully-funded. Why are either of the two plans handing out bonuses?

To be sure, this was before the recent market drop, but even before that, the stats have not been great:

The average returns have been below average, the net cash flows have been going out of the funds at quite a large magnitude… they need to build up the assets, not draw them down.

From the story:

On March 6, U.S. Bankruptcy Judge Thomas Tucker, who was appointed in early 2015 to oversee the wind-down of Detroit's bankruptcy case, approved a modification to the bankruptcy plan and issued an order that was in favor of the bonus check. The city is 100% prefunding the extra payment.
Naglick noted that no other creditors filed objections to the extra payment for retirees.
More money could be on the way for retirees. Duggan's last budget presentation as the city's chief executive included plans to allocate another $10 million for a second supplemental retirement check for the second consecutive year. But that extra payment would have to be approved by city council and the bankruptcy court, if the case continues to remain open.

So what’s happening is that money is coming straight from the budget to these pension bonus checks. That’s what “100% prefunding” means — they’re just taking current cash to pay for the checks.

But that also means they’re not paying down the ~30% pension funding hole with whatever budget surpluses they have.

Down with Tesla! In Pension Funds! In New York!

-Sigh-

This is my state.

Point: 11 Mar 2025, Press Release: NY State Senators Urge Comptroller DiNapoli to Begin Pension Fund Divestment in Tesla, Inc.

23 Senators sign letter to NYS Comptroller recommending divestment from troubled company
ALBANY, N.Y. – Today, New York State Senator Patricia Fahy (D—Albany) was joined by more than twenty of her Senate colleagues in sending a letter to New York State Comptroller Thomas DiNapoli, urging him to begin the process of divesting Tesla shares directly owned by the New York State pension fund.
The letter comes on the heels of CNBC reporting that Tesla shares plunged more than 28% in February of this year, their worst month since a 37% drop in December 2022, and recent news that Tesla posted a $2.31 billion profit in the fourth quarter of 2024, marking a 71% drop from the $7.93 billion it earned during the same period in 2023. Tesla, at a stock price of $290.80 per share, is approximately 2 percent of the total value of the S&P 500. If it were to decline to the price target of $135 that some analysts have projected, the resulting loss would be 1.2 percent of asset owners’ total S&P 500 indexed portfolio.
The New York State Retirement Fund is overseen by the New York State Comptroller, who retains sole fiduciary responsibility; and is one of the largest public pension funds in the United States, providing retirement security for over one million New York State and Local Retirement System (NYSLRS) members, retirees and beneficiaries. It has consistently been ranked as one of the best-managed and best-funded plans in the nation.

Counterpoint, 31 Mar 2025: Senate Minority Calls On Comptroller DiNapoli To Reject Senate Majority Partisan Pension Politics

Senate Minority Leader Rob Ortt and Colleagues Ask Comptroller DiNapoli to Reject Politically Motivated Pension Fund Divestment from Tesla
In response to Senate Democrats’ eye-rolling attempt to politicize New Yorkers’ retirement funds by demanding divestment from Tesla Inc. from the State’s pension fund, Senate Republican Leader Rob Ortt and members of the Senate Republican Conference penned a letter to Comptroller DiNapoli urging him to reject the Democrats’ purely political request that has nothing to do with pension fund performance.
The letter states, “While we recognize that catering to certain political factions may be tempting, as Comptroller, your fiduciary responsibility is to act in the best interest of the pension fund’s beneficiaries, not to engage in political posturing. Divesting from Tesla would be a disservice to the millions of New Yorkers who depend on the pension fund.”
“Additionally, we find it ironic that some of the same voices calling for divestment also frame climate change as an existential threat to humanity while seeking to divest from the world’s largest electric vehicle maker,” continued the letter.
“Calls to divest from Tesla are both short-sighted and blatantly hypocritical. The Comptroller’s primary responsibility is to secure the best financial return for New York’s public employees, not to engage in politically motivated decisions that jeopardize the pension fund. Tesla, as the largest U.S. manufacturer of electric vehicles, represents an innovative and successful company that aligns with the very climate priorities Democrats claim to champion. Demanding divestment from such a company is not only counterproductive but also exposes their fixation on partisan games over actual results,” said Senate Republican Leader Rob Ortt.

Okay, in neither of these did I see the either an appropriate legislative action, which is to replace the NY sole fiduciary with a better governance structure, or the relevant piece of info, which is how much Tesla stock the NY pensions own.

I did the lazy thing, and found the info in someone else’s reporting. Via Net Zero Investor:

Last week, a group of 23 Democratic Senators sent a letter to New York State Comptroller Thomas DiNapoli, urging the state’s pension fund to divest. The $273bn fund currently owns 3.5 million Tesla shares—a potential divestment that could significantly impact the car giant.

3.5 million Tesla shares were worth $810 million in December, at the last available valuation of the NY state funds (for the $273 billion) — so that’s 0.3% of the fund.

That was based on the price in December. Based on the price today, it was worth $1.1 billion.

I don’t think the Comptroller is touching those shares. Especially not for a short-term bitch fest, and not while the market is already is riled up re: tariffs.

As I mentioned at the top, the pensions are a long-term promise, so trading based on short-term disruptions, especially 0.3% of your portfolio, is foolish.

Leftover Pension Stories from March 2025

6 Mar 2025, WUNC: NC Treasurer moving forward with new pension investment plan
7 Mar 2025, WECT: NC lawmakers reverse themselves, move ahead with bill to invest State Pension Plan in cryptocurrency
7 Mar 2025, ASPPA: WEP/GPO Repeal Has Already Resulted in Retroactive Benefits
14 Mar 2025, FireRescue1: Ore. bill proposes to lower firefighter retirement age to 50
2 Mar 2025, Must Read Alaska: Reason Foundation disputes Democrats’ claim that a pension will retain state workers
5 Mar 2025, amNY: City Comptroller hopeful Mark Levine wants to use city pension funds to build 75,000 affordable homes
12 Mar 2025, P&I: N.Y. state judges reject lawsuit challenging NYC pension funds' fossil fuel divesting
9 Mar 2025, NY Post: NYC Comptroller Brad Lander accused of ‘divesting’ pension funds from Israel
21 Mar 2025, Chuck Schumer Press Release: SCHUMER, FOLLOWING HISTORIC PENSION FIX LAW HE PASSED, ANNOUNCES HUDSON VALLEY IBEW UNION TO RECEIVE $45+ MILLION TO RESTORE AT-RISK PENSIONS FOR 850 UNION WORKERS AND THEIR FAMILIES - this has to do with the private union pensions bailout from 2021, after Biden became President
18 Mar 2025, NJ Spotlight News: NJ may tweak pension rules for teachers, state police
19 Mar 2025, Los Angeles Daily News editorial: California’s soaring pension debt rears its head
20 Mar 2025, Lansing State Journal: Lansing police lieutenant charged with embezzling from city will get his full pension
8 Mar 2025, Texas AFT: Voucher Scam Threatens More Than Just Schools. It Puts Teacher Pensions at Risk.
7 Mar 2025, The Press Democrat: A Southern California union boss thought his $300,000 salary would count toward his pension. Here’s why it won’t
31 Mar 2025, Fox9: Teacher pension ages pushing younger as lawmakers shoot for savings
31 Mar 2025, Hartford Business Journal: Debate over CT pension calculations heats up - this has to do with including overtime in the benefit formulas… I may have to do a separate post on this
28 Mar 2025, CTMirror: Debate over CT pension calculations heats up
4 Mar 2025, NBC 10 Boston: Feds go after disgraced Stoneham cop's pension to pay restitution
21 Mar 2025, City Limits: Opinion: NYC Workers Ask NYC Candidates to Divest Our Pensions from War
26 Mar 2025, STAT News : Largest U.S. pension fund claims UnitedHealth cheated investors by concealing Medicare Advantage scheme
26 Mar 2025, Cleveland.com : STRS wants pension reform to include more contributions. But who will pay the bill?
22 Mar 2025, San Diego Union-Tribune: When will city leaders grasp desperate need for pension reform?
5 Mar 2025, SSA: Social Security Pays Billions of Dollars in Retroactive Payments

STUMP - Meep on public finance, pensions, mortality and more

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