The second-largest U.S. teachers union has added a firm formerly headed by Bruce Rauner, a Republican leading the race in next week’s Illinois gubernatorial primary, to its enemies list.
The American Federation of Teachers is urging public pensions to review investments with Chicago-based GTCR, a private-equity firm where Rauner was chairman before stepping down in 2012. He supports shifting government workers to 401(k)- type plans from traditional defined-benefit pensions, which give retirees a payout based on years of service and final salary.
The AFT, with 1.5 million members, is scheduled to release an updated “watch list” of 29 money managers that the union says support groups opposed to traditional pensions. GTCR has $4.9 billion of commitments from U.S. public pension funds, according to Preqin Ltd., a London-based research firm. The AFT is also adding Highbridge Capital Management and a unit of London-based insurer Aon Plc to the list.
“Trustees should actually know if someone who is trying to get you to invest with them are also trying to eliminate the pension system,” AFT President Randi Weingarten said in a telephone interview. “The centerpiece of Rauner’s campaign is the elimination of the defined-benefit plan.”
* Pensions and Investments…
“Having earned millions as an asset manager of defined benefit plans, Rauner is now, as a gubernatorial candidate, calling for freezing the benefits of the state’s defined benefit pension plans and putting all new public employees in a defined contribution plan,” the report said.
The union’s first Ranking Asset Managers report, published last April, has been amended twice to remove six firms, including AQR Capital Management and KKR. Following the publication of the report, executives at both firms detailed their support for defined benefit plans in letters to their pension plan clients.
The full report is here.