CalPERS Votes To Sell Tobacco Stock
Oct. 17, 2000
SACRAMENTO, Calif. (AP) _ The nation's largest public employee pension fund has decided to sell the tobacco stock in its biggest portfolios, saying an ``unprecedented amount'' of litigation and regulation made the industry a bad investment.
The board of the California Public Employees' Retirement System voted 7-5 on Monday to divest the approximately $525 million in stock it holds in tobacco firms in its ``passively managed'' portfolios.
``Today's action was the right financial decision,'' said state Treasurer Phil Angelides, a member of the CalPERS board. ``It recognizes the fact that the tobacco industry faces an extraordinary and unprecedented barrage of litigation and that there are sound, alternative investments available.''
The action comes about four months after California's other major public pension fund, the State Teachers' Retirement System, announced it would sell off its tobacco stock holdings, worth more than $237 million.
The CalPERS board set no deadline for the sale. It told its staff to sell the stock on a schedule it decided was ``most appropriate,'' said Patricia Macht, a spokeswoman for the board.
The CalPERS staff had recommended against selling the stock, saying it would cost at least $30 million.
But Angelides said the tobacco investments had already lost money for the pension fund and were likely to lose more.
A bill requiring the two pension funds to sell their tobacco stocks passed the state Senate earlier this year but died in an Assembly committee.
Monday's vote affected tobacco stocks held in the pension system's largest portfolios, so-called passively managed accounts made up of investments in top domestic companies that are held for long periods of time.
Tobacco stocks make up about a half of one percent of those holdings, Macht said.
CalPERS covers about 330,000 retirees and 770,000 active state and local government employees.