24 Aug 2016

Public sector pensions invested in weapons

8:50 am on 24 August 2016

The retirement savings of tens of thousands of public servants, including a handful of MPs, are being reviewed by the State Services Commission after it was revealed some of the money is invested in companies making cluster bombs.

A French UN peacekeeper in Lebanon holds an inert Israeli cluster bomblet. 14 May 2007. At least 28 people have been killed and 177 injured by the weapons since the conflict ended in 2006, according to the UN.

Remants of a cluster bomb in Lebanon, 2007. Photo: AFP

The State Services Retirement Savings Scheme (SSRSS) has about 30,0000 members, including civil servants, teachers, police and parliamentary support staff.

The scheme has more than $1 billion managed by two providers, ASB and AMP.

RNZ has found both providers invested some of the scheme's money in companies that made cluster bombs, anti-personnel mines and nuclear weapons including Northrop Grumman, General Dynamics, Honeywell International and Lockheed Martin.

These companies have been banned for investment by the New Zealand Superannuation Fund and ACC because of New Zealand's obligations under international law.

RNZ has previously revealed that six of the nine default KiwiSaver providers have money tied up in companies that manufacturer weapons.

Auckland secondary school teacher Guy Wishart belongs to ASB's scheme and he said he and his colleagues were surprised and horrified to find out where their money was being invested.

"Our first reaction was disbelief really that without realising it, we were supporting funds that I suppose are going to the kinds of industry that we would never want to support, unethical kind of behaviour in our view," he said.

Finding out exactly which companies ASB had invested money in was difficult, he said, and he wanted more transparency.

"Personally I do not want to be feeling like somehow I contributed to the death or maiming of individuals around the world.

"I would like an environmentally-conscious option as well as an ethical option, even if the returns are lower, just so I didn't feel bad," Mr Wishart said.

Public Service Association (PSA) national secretary Glenn Barclay said many members would be disappointed to find out where their money was invested but those wanting to leave faced a difficult choice.

"The State Sector Retirement Saving Scheme has got more flexibility than KiwiSaver. It doesn't come, of course, with the government subsidies that KiwiSaver does but you can access your funds a bit earlier and people see that as an advantage," he said.

The PSA has pushed for the scheme to include ethical options in the past but it had been told it was too difficult, Mr Barclay said.

The union has written to the State Services Commission asking it to investigate its concerns and review the scheme, he said.

The Commission's chief legal adviser and SSRSS advisory board chair Andrew Royle said he was taking the union's concerns seriously.

AMP and ASB have been asked to come up with ethical options, he said.

"The key thing for us here is to make sure that SSRSS members can save for their retirement with a range of investment options managed by reputable fund managers."

Public servants expected to have ethical investment choices available to them and the Commission would be working with the providers to make sure that happened, Mr Royle said.

MP's savings in scheme

Labour Party finance spokesperson Grant Robertson, a former public servant, is one of four serving MPs with savings in AMP's scheme.

29062016 Photo RNZ / Rebekah Parsons-King. Grant Robertson

Labour Party finance spokesperson Grant Robertson. Photo: RNZ / Rebekah Parsons-King

He said he was not aware the scheme invested in companies that were blacklisted by other government agencies.

"I think, like most New Zealanders, I made some assumptions that the KiwiSaver funds and state sector retirement schemes would be invested in a similar way to the Super Fund and ACC.

Given some taxpayer money was going into the scheme in the form of employer contributions the SSRSS should apply the ethical standards adopted by other government agencies, he said

"There's a reasonable expectation that something like a state sector retirement fund would be invested based on ethical principles and I'd like to see some urgency in a review by the State Services Commission to see that happen," he said.

Labour MPs Jacinda Ardern, David Clark and Chris Hipkins were also members of the scheme, according to Parliament's Register of Pecuniary Interests.

Investments are legal, schemes say

Meanwhile, Minister of Commerce Paul Goldsmith is expecting to find out this week whether KiwiSaver funds with money tied up in companies that make cluster bombes are, in fact, breaking the law.

ASB said it believes its investments are legal, but it is conducting a review of its approach to responsible investment and changes would be made by the end of the year.

"The outcomes of this review will include whether there is another way we can provide investors with an alternative low cost, index tracking investment option that focuses on socially responsible investments.

"We use an index-tracking investment management style meaning ASB does not make decisions on individual stocks. This supports our focus on keeping investment costs as low as possible meaning that more of our customers' money is invested to earn returns," it said in a statement.

AMP said all its funds also comply with the law, but it has committed to getting out of any indirect investments in munitions by the end of the year.

"It is important to differentiate between legal compliance and the genuine interest customers have in ethical investing.

"All AMP funds are legally compliant. However, AMP also understands that some investors aspire to a higher standard of ethical investing. It is for this reason that AMP's clients have access to AMP's Responsible Investment Leaders Balanced Fund," it said in a statement.

The SSRSS was set up by the government and the State Services Commission in partnership with the PSA and PPTA in 2004 after the Government Superannuation Fund closed in 1992.

It stopped taking new members in 2008 after the launch of KiwiSaver in 2007.

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