State Treasurer Vivek Malek is urging public pension systems to adopt policies to prevent the use of retirement assets for political contributions. (Rudi Keller/Missouri Independent)
Every public pension program in Missouri should adopt policies against making political contributions from retirement funds, State Treasurer Vivek Malek wrote in a letter sent Monday to system managers.
In the letter, Malek wrote that contributions this fall by funds set up to pay pensions for sheriffs and prosecutors to the campaign committee promoting passage of Amendment 6 were “deeply concerning.”
Using the money contributed by taxpayers and employees for political purposes rather than market investments does not help the funds pay current and future benefits, Malek wrote.
“In fact, these expenditures imprudently risk system resources and erode the public’s trust,” Malek wrote.
Missouri state pension board bans use of fund for political donations
The letter, sent to 90 state and local pension funds, comes just a few days after the 11-member Board of Trustees of the Missouri State Retirement System voted to prohibit the use of its pension funds for political contributions.
Malek is a trustee of MOSERS because of his office. The policy change was presented to the board by MOSERS staff after inquiries from Malek.
During the meeting, Malek said the retirement system should be focused on maximizing the return on its investments to pay benefits.
“All public employee retirement systems in Missouri, including MOSERS, should not expend any funds supporting or opposing ballot measures or the election of candidates for public office,” Malek said. “Keeping MOSERS free from such activities upholds the trust of those we serve and reinforces our commitment to remaining focused solely on our fiduciary responsibilities.”
State Rep. Dirk Deaton, a Republican from Noel who is also on the MOSERS board, said last week he intends to file legislation barring political contributions from public pension funds.
Amendment 6, defeated with 61% of voters opposed, would have imposed fees on criminal cases to fund pensions for sheriffs and prosecutors. On Oct. 2, the Missouri Sheriffs’ Retirement System contributed $30,000 to the campaign, followed on Oct. 8 by a $50,000 contribution from the Prosecuting Attorneys and Circuit Attorneys Retirement System.
The fees that had funded the two pension systems were declared unconstitutional in 2021. To shore up its finances, state lawmakers this year appropriated $5 million in general revenue to the sheriffs fund.
The various pension funds for state, local and University of Missouri employees hold about $100 billion in net assets and some could, if any substantial portion were used for politics, provide far more than any other potential donor. That is why strict policies are needed, Malek said.
“Recent expenditures of public pension funds in direct support of a ballot measure merit serious consideration of the appropriate use of these funds and a thoughtful response that safeguards our public pension systems’ mission,” the letter states.
After the MOSERS action, The Independent sent inquiries to five retirement systems authorized by state law. The sheriffs and prosecutors systems did not respond to emails seeking comment on the MOSERS action.
The three largest — for educators and public school employees; for local government employees; and for Department of Transportation and Missouri State Highway Patrol troopers — all said long-standing policies and state law already prohibit the use of retirement funds for political donations.
MOSERS had $8.9 billion in net assets on June 30, according to the latest annual report. It provides benefits to the largest number of former state employees, but it is not the wealthiest retirement fund created in state law.
That distinction belongs to the system providing benefits for former educators and school district employees, known as PSRS/PEERS, which held $55 billion in assets on June 30, 2023.
“PSRS/PEERS has long had a board policy that prohibits systems’ funds from being used for political purposes,” Executive Director Dearld Snider said. “The systems have never used and will never use systems’ funds to make contributions to political campaigns or ballot initiatives.”
The local government system, known as LAGERS, has about $11 billion in assets.
“It has been a longstanding practice of LAGERS to not use system assets for political purposes,” spokeswoman Elizabeth Althoff wrote in an email.
The retirement system for Missouri Department of Transportation workers and Missouri State Highway Patrol troopers has $3.7 billion in assets. Known as MPERS, it is maintained as a separate system because it is mainly funded by fuel taxes and vehicle fees, as are the agencies it serves.
MPERS does not have a specific policy mirroring the MOSERS action and is unlikely to consider one, fund director Scott Simon wrote in an email.
“What we do have are governing statutes that provide all assets of the fund are dedicated to and held in trust for the members and the purposes set forth in our governing statutes,” Simon wrote. “Nowhere in those statutes does it authorize the use of assets for political purposes (i.e., candidates, ballot initiatives, etc.).”