Divestment will burn firefighters' pensions

By Jay Fisher
Guest columnist
Updated 11/13/2018 9:43 AM
  • Jay Fisher

    Jay Fisher

While battling a house fire in suburban Chicago late last year, Lt. Clint Sanders sustained severe burns on his hands and lungs. The 28-year veteran of the Roberts Park Fire Protection District required a two-week hospital stay, according to a Channel 7 report.

Sanders is just one of many of the brave first responders who risk their lives to protect others in cities and towns across Illinois. Many are injured; some make the ultimate sacrifice. The least we can do is offer them a stable retirement after they finish serving their communities.

Unfortunately, some prominent politicians are advocating measures that would jeopardize firefighters' pensions. State Sen. Daniel Biss, who unsuccessfully sought the Democratic gubernatorial nomination earlier this year, said, "Illinois should divest its pension funds from investments in dirty energy ... first because it's the right thing to do ... and also because I think it's the right investment."

He's wrong on both counts. Dumping oil and gas stocks is the wrong way to combat climate change. And it would cost Illinois' public pension funds billions of dollars in capital gains.

Divesting from oil and natural gas companies' stocks is a purely symbolic gesture. It won't change the behavior of fossil fuel companies, since other investors will eagerly snap up the shares Illinois sells. When Americans divested from Sudanese oil companies to protest the government's alleged war crimes, other investors stepped in. "Thanks to China and a trio of Asian national oil companies, oil still flows in Sudan," concluded a 2009 article in the Journal of African Modern Studies.

Divestment would deprive state workers of the retirement benefits they've been promised.

For years, Illinois has put too little money into its pension funds. Now, those funds are at least $130 billion short of what's needed to pay out full benefits to all state workers, according to Springfield's official calculations. An independent analysis by Moody's puts the shortfall at more than $250 billion.

Selling off oil and gas stocks would put the pension funds in an even worse position. Oil and natural gas stocks are some of the most profitable assets in the state's portfolio. While such investments account for just 3.7 percent of the $47.7 billion in assets held by the state's pension funds, they account for 8.9 percent of the returns from 2005 to 2013. Every $1 invested in oil and gas yielded more than $2 in returns -- a far better performance than the stock market as a whole.

Divestment would cause Chicago's Fireman's Annuity and Benefit Fund to forego nearly $4.6 billion in capital gains over the next fifty years. A study of 11 large public pension funds around the country found that divesting from oil and gas holdings would result in $3.8 trillion in foregone returns over the next 50 years.

Illinois firefighters aren't exactly rolling in cash. The state's 17,000-plus firefighters earn an average of $55,300 a year. They deserve the certainty of an adequate retirement income.

Nationwide, firefighters suffered more than 24,000 injuries in 2016. There were 69 on-duty deaths that year as well, according to the National Fire Protection Association. In Illinois alone, 24 firefighters died in the line of duty from 2010 to 2016.

In exchange for taking on these risks, the state promises firefighters a financially secure retirement. It's time for Illinois politicians to keep their promise by rejecting ill-advised divestment proposals.

Jay Fisher is the Lisle Township Republican Chairman and a former member of the Lisle-Woodridge Fire District Firefighters' Pension Fund.

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