Missouri governor urges state pension board to divest holdings in China

Poor financial returns and national security concerns led Republican Missouri Gov. Mike Parson to urge trustees of the Missouri State Employees Retirement System to divest in China.

“The reports I read indicate that investing in China is a poor economic strategy, and information presented to the board confirms that, at best, the current Chinese investments likely produce a static return on investment,” Parson wrote to the organization’s board of trustees on Wednesday. “I also fail to understand the rationale in maintaining Chinese investments while removing Russian ones. Both countries pose security concerns to the United States and neither provide strong returns for state employees.”

Last year, the organization adopted a new general investment guideline that it won’t invest directly in securities issued by the Russian government, Russian-government affiliated entities, or Russian-domiciled entities. It prohibits engaging investment managers who have discretion to direct the system's assets into investments in the Russian government, Russian-government affiliated entities or Russian-domiciled entities. Investments were to be divested at the earliest prudent opportunity, the document stated.

An agenda for the Nov. 16 meeting posted on the organization’s website showed a “China Overview” under an “Investment Committee Report” along with a an “Annual Investment Policy Statement Review Discussion.” The organization has approximately $200 million invested in China, according to Republican Treasurer Vivek Malek, appointed by Parson when Republican Scott Fitzpatrick was elected Auditor last November.

Parson’s letter stated Malek asked for a vote on withdrawing holdings in China. It failed on a voice vote and Malek wrote on his website Democratic Sen. John Rizzo stated the decision should be made by the legislature.

The board consists of two members appointed by the Senate, two appointed by the House, two chosen by Parson, the state treasurer, the commissioner of the Office of Administration, two elected members of the organization and one elected retired member.

“Some of you argue that disinvestment in China should be a decision by the General Assembly,” Parson wrote. “However, you have the authority to act now, especially as the legislature will consider MOSER's budget request in the coming months – a request I will point out has increased because investments and contributions are not keeping up. There is also no need to delay when relevant data is before you, and some of you are appointed specifically as representatives of your respective bodies.”

Parson wrote the state provided the state pension organization $1 billion last year and $4 billion during the last decade. Parson asked the board for an additional meeting to be scheduled to reconsider Malek’s request and a roll call vote be recorded on the measure.

Investment documents show the organization’s growth assets include a range of 15% to 45% in global public equities and 5% to 20% in global private equities.

The organization is paying pension benefits to 55,328 retirees as of June 30, according to its website, and the average annual pension benefit is $17,143.