Press Release

New ALEC Model Policy Protects Retirees from Politically Motivated Investment Schemes

Investments should be made with an eye toward long-term rates of return, independent of political interests

Arlington, Va. – The American Legislative Exchange Council (ALEC) today released new model policy today, the State Government Employee Retirement Protection Act.

This model strengthens fiduciary rules to protect pensioners from politically driven investment strategies and builds on ALEC’s previous publication, Keeping Politics out of Pensions.  These strategies reduce investment returns over the long term, which leads to underfunding in state pension plans across the country and and taxpayers ultimately footing the bill for the shortfalls.

“It’s fine for political activists to use their own money to promote whatever social causes they choose,” explained Jonathan Williams, ALEC Chief Economist and Executive Vice President of Policy. “But it is not okay to use the hard-earned retirement savings from others to push their own personal agenda.”

Read the model policy here.

The newest model policy was introduced by state lawmakers who have become increasingly concerned that state pension funds are being mismanaged in the name of political correctness.

“Every state employee should have full faith and confidence that their retirement funds are being invested for maximum growth and not being used to promote a political agenda,” said ALEC Vice President of Policy Lee Schalk.

State and local government pensions are important to overall national savings, accounting 19 percent of total retirement saving assets.

“Our model policy would ensure that state pension funds are managed in such a way that they bring in consistent and predictable returns,” added Williams.  “Our model is very clear that investments should be made with an eye toward long-term rates of return, and independent of political interests.”

In ALEC’s 49-year history, the organization has adopted more than 900 model policies.

A report by USA Today, the Arizona Republic, and the Center for Public Integrity found that between 2010 and 2018, ALEC model bills were introduced 2,900 times across all 50 states and in Congress, and had a 21 percent passage rate.

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The American Legislative Exchange Council is the largest nonpartisan, voluntary membership organization of state legislators in the United States. The Council is governed by state legislators who comprise the Board of Directors and is advised by the Private Enterprise Advisory Council, a group of private, foundation and think tank members. For more information about the American Legislative Exchange Council, please visit: www.alec.org.