One of the biggest achievements of the union movement was to obtain pensions for its members. These days, most private-sector workers have 401(k) style retirement plans, which is both good and bad. The upside is that they don't have to worry about their benefits being hit if their company goes bankrupt, but the downside is that their retirement income depends on how well their portfolio does.

These days most people's retirement funds are invested in a broad stock portfolio, which means that their wealth goes up and down with the stock market. However, a number of activists have begun putting pressure on the investment firms that manage these portfolios to take into account a variety of concerns that are unrelated to building wealth when they make their investment decisions.

For instance, they are encouraged to avoid investing in companies that produce fossil fuel, since they contribute to climate change, or in companies that have some ties to the defense industry. They also pressure them to avoid companies that may have management teams that are insufficiently diverse or do not take the right positions on a variety of social issues.

Hazardous to Wealth

Several members of Congress would like the SEC, which regulates financial advisers, to do more to allow or even encourage this behavior, which could have lasting consequences for public-sector union workers who belong to the Common Retirement Fund, which holds the assets of the New York State and Local Retirement System. It represents about 650,000 active state and local employees and 452,000 retirees, including our members. Discouraging or prohibiting investors to invest their money into certain sectors of society means that their retirement plans may not grow as fast.

Those who push for investment-management firms to take into account environmental, social, and corporate governance issues in their decision-making often insist that this doesn't hurt their returns. However, that's simply not true, and even a small reduction can have a significant impact on the value of their portfolio.

And while public-sector retirees who receive a fixed annual pension may believe they're immune from such concerns, that may not be the case. There are millions of current or retired state employees across the United States, participating in state or local pensions that, unlike New York, are severely underfunded. While no one can be sure how these plans will be made whole, pensions that have already become insolvent have forced many current and future pension recipients to take a reduction in their defined benefits. Any investment strategy that subjects investment returns to political ideologies could exacerbate this problem.

Asking Too Much

Forcing union workers to make such a sacrifice without their consent in the name of a cause they may not fully support is a bridge too far. All decisions regarding investments for the pensions of working families should be made first and foremost with the goal of maximizing returns and ensuring the long-term viability of the pension plans. Pensions should not be used by politicians—or anyone else, for that matter—as a tool to accomplish their political or ideological goals. It's not their money.

Too many times the hard-fought financial security of working families has been put at risk by ambitious politicians, seeking to accomplish their extreme ideological agenda. That is not acceptable.

The people who manage these pensions and their investment funds have a fiduciary obligation to maximize the return on these funds and not to use them to play political games. Their proxy investors should have the same obligation and the entire process should be transparent.

Public pensions are a right negotiated by unions for state and municipal workers and retirees who have devoted their entire lives to serving the public and keeping the power on in our communities. If we begin to allow our elected officials to gradually use our investments to drive their own political agendas, then what protections will working families have left?

One thing is clear. Our modest pensions cannot—and should not—be used as political bargaining chips to score political points. President Biden, Speaker Pelosi and Majority Leader Schumer must stand with working people and the public-sector unions who helped elect them. Don't overturn proxy regulations. The solvency and stability of our pension plans must come first.

Daniel C. Levler is president of the Suffolk County Association of Municipal Employees, the largest public-sector union in Suffolk County, which represents 10,000 active and retired workers.

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