WHY SB 7 WILL HURT RETIREMENT:
SB 7 proposes putting in place broad and far-reaching requirements for all fiduciaries of Louisiana’s public retirement systems when they are making investment decisions or exercising voting rights on behalf of system members.
Additionally, this bill in its current form would restrict how TRSL investments can be made and would be detrimental to our well-run retirement system. The specific language in the present bill as written could cost TRSL billions in potential investment earnings and could increase the retirement system’s debt.
This bill impacts many factors related to actuaries whose work requires them to compile and analyze data/ analyze statistics to calculate fiduciary risks, and thus this will impact how the system presently operates. In summary, this bill will increase costs to the point that it will be detrimental to the State as a whole in terms of insurance, public safety, and bond rating.
For more detail the bill can be broken by the following as LRTA works in tandem with the Teacher Retirement System of Louisiana (TRSL) to oppose SB 7 in its present form:
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- The current law imposes traditional fiduciary duties on managers of publicly managed assets, proxy firms, or contractors of any public retirement or pension systems. These duties include responsibility to act in the best interests of plan members and to exercise care in the manner of a prudent institutional investor.
- In addition to current fiduciary duties, proposes to require third-party service providers of retirement system assets to make investment decisions based solely on financial factors that have a direct material impact on the financial risk or return on an investment, including those outlined in R.S. 11:263(D)(3).
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- Proposes to exclude Environmental, Social, and Governance (ESG) commitments from the definition of financial factors. Provides that ESG commitments would include, but are not limited to, commitments to vote shares for any of the following purposes:
- eliminating, reducing, offsetting, or disclosing greenhouse gas emissions;
- institution or assessment of corporate board and employment composition, compensation or disclosure that incorporates characteristics protected in this state; divesting from or limiting investments in a company for failing or not committing to meet environmental standards or disclosures;
- access to abortion, sex or gender change or transgender surgery;
- divesting from or limiting investments in a company that undertakes multiple activities related to the lawful use of firearms, ammunition, and component parts/accessories of such;
- divesting from or limiting investments in a company that undertakes multiple activities related to petroleum oil or gasoline products extracted, produced, or refined in La. or the U.S.; and
- acquisition of immovable property by foreign adversaries as defined in state law.
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- Provides for various items that can be evidence of an ESG commitment, including:
- letters to clients;
- statements;
- reports
- communications with portfolio companies
- advertising;
- statements of principles or policies (both individual and joint statements);
- actual votes made; or
- participation in, affiliation with, or signatory status on any coalition, initiative, agreement, or commitment.
- Proposes to require that any shareholder proxy votes related to retirement system assets be according to fiduciary standards and based on financial factors.
- Proposes to require any advisors, managers, or firms retained by retirement systems that assist with exercising shareholder proxy voting rights to commit to following proxy vote guidelines that comply with the provisions of this legislation.
- Prohibits systems from selling shareholder proxy rights or votes.
- Requires a retirement system to annually report to its board all proxy votes related to publicly-managed assets. The report should be a proxy voting summary and be made available on the system’s website.
- Proposes to give the state attorney general broad and exclusive authority to investigate and enforce the provisions of this legislation using sworn statements, requests for information, and enforcement suits.
- Would impose damages payable to the retirement system by third-party service providers found in violation based on evidence of damages. Caps damages at three times all monies paid to the person or company by the system for that provider’s services with paid damages applied to the system’s unfunded accrued liability (UAL).
- Effective June 30, 2025.
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Lastly, when the time is right and the Senate Retirement meeting is officially scheduled, LRTA will provide date(s), time(s) and location for when this bill is ready to be reviewed. LRTA encourages retirees to attend and sign red opposition cards for SB 7 (in its current form) that are handed out at the Retirement Committee meeting at the Louisiana State Capitol.
However, YOU DO NOT HAVE TO BE PRESENT TO SIGN OPPOSITION CARDS. To sign opposition cards for committee meetings you will be able to do so on the Louisiana legislative website. Once the meeting is scheduled LRTA will provide a link. Generally speaking though, if you navigate to the “Bill Information” section on the https://legis.la.gov/ website, you will be able to find the specific bill you want to oppose (SB 7). Once there, you should see an option to “Submit Witness Card” or a similar phrase, which will allow you to electronically register your opposition to the bill. Again, we will provide a link once the meeting is scheduled.
