Government employee pension investments and free speech

The Santa Fe Reporter has had some interesting articles recently discussing the topic of government workers who are concerned that their pension investments are being invested in companies with which they disagree politically. The initial article framing the debate can be found here. The father of the editor! of the paper who happens to be a CPA had an insightful posting on the site recently as well in which he explains that pension funds are NOT really used to fund corporate speech and lobbying efforts, but then questions the very real impact of government unions on the political process.

I weighed in with my own letter to the editor on the topic which I have pasted in its entirety below:

Letters to the Editor
The Santa Fe Reporter

I may not agree with the philosophical reasons that government employees may not want their pensions invested in corporations, but I cannot help to sympathize with their plight.

Whether the issue is truly one of “free speech” or not is a question for the courts, but the whole debate points to the outdated model upon which government employee pensions are based. After all, today’s workers, even in government, tend to change jobs more frequently, be more savvy when it comes to retirement planning, and demand more autonomy over how their money is spent and invested than prior generations.

Pensions are a classic “one-size-fits-all” model from a bygone era. In New Mexico, by the way, that model is massively underfunded and could leave today’s young workers – private and public sector alike – holding the bag.

New Mexico could avoid the free speech problem by embracing much-needed reforms that give individual workers the freedom and responsibility to plan for and invest for their retirement in 401k-style plans. States are increasingly looking at this model due to the massive underfunding of traditional pension plans, but these free speech questions and potential legal challenges will only hasten the switch.