Norway’s Largest Pension Fund Divests From Alcohol, Gambling Investments

Norway’s biggest pension fund is dumping alcohol and gambling companies from its $80 billion portfolio, continuing its push to divest from unethical equities otherwise known as “sin stocks” to invest responsibly on behalf of its 1 million-plus plan members.

Oslo’s Kommunal Landspensjonskasse, or KLP, will boot 90 companies in the two sectors, including brewers Anheuser Busch and Heineken, and the Malta-based online betting service Gaming Innovation Group. The two sin stock sectors comprise 1.6% of KLP’s equities portfolio, or $320 million.

Sverre Thornes, the fund’s chief executive officer, said the fund “regularly” questions the ethics of its investment decisions to stick to its responsibility-driven guidelines. “This is not just about what gives the highest return, but also about our investments contributing to positive and sustainable social development,” said Thornes.

Approximately 5% of the world’s deaths per year are alcohol-related, according to the World Health Organization. In Norway, alcohol is linked to more than half of its violence reports.

Thornes admitted that gambling and drinking can be fine in moderation. Addiction to these things, however, “have major negative consequences” for individuals and their loved ones, he said, as well as “great costs” for society.

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Alcohol absorbs more than $2 billion per year in costs from Norway alone.

“With these changes we want to invest the pension funds we manage in other businesses, which to a greater extent contribute to a safe and better world for everyone,” said Thornes.

The decision, which the plan said it consulted with members and shareowners before making, is similar to what other large pension plans, such as the New York Common Retirement Fund and the California State Teachers Retirement System, are doing by divesting stocks in oil, prisons, and gun companies.

Earlier in the month, the Norwegian fund removed $3.7 billion worth of companies involved in coal-based activities, an extension of its auctions in 2014, when it ditched firms that earn more than 50% of revenue from coal. Like its fellow environmental, social, and governance-oriented institutions, it prefers renewable energy, such as wind power.

KLP recently invested $100 million into a Copenhagen Infrastructure Partners-run renewable energy fund, joining fellow Nordic pension plans PensionDanmark, ATP, and Laegernes.

Thornes also said the pension plan does not and will not invest in pornography.

KLP returned 3.1% in the first quarter of 2019. It allocated to stocks (23.6%), bonds (46.7%), lending (12.1%), property (12.1%), and other financial assets (5.6%) as of March 31.

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Tags: Alcohol, Divestment, ESG, Gambling, KLP, Norway, Pension, Sin Stocks

Two US senators have introduced a bill with a broad set of reforms intended to improve Americans’ retirement security that include allowing more money to be set aside for retirement, and helping small businesses offer retirement plans.

Sens. Ben Cardin, a Maryland Democrat, and Rob Portman, an Ohio Republican, introduced the Retirement Security & Savings Act, which includes more than 50 provisions to addresses four major focal points to improve retirement savings. In addition to allowing people to set aside more for retirement, and helping small businesses offer retirement plans, it also aims to expand access to retirement savings plans for low-income Americans without coverage, and provide more certainty and flexibility during Americans’ retirement years.

“Ensuring that families and workers can retire with dignity and stability is an ongoing, and strongly bipartisan, effort,” said Cardin in a release. “There have been many recent efforts acknowledging this need, yet more work needs to be done to make sure families have the necessary tools to be successful in their retirement.”

The bill comes on the heels of a similar bill passed by the House Ways and Means Committee in April called the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which calls for the increase of the contribution cap to 15% from 10% for employees enrolled in safe harbor plans, and the repeal of the rule that prohibits contributing to a traditional IRA after age 70½.

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To help those who have fallen behind in saving for retirement, the bill introduced by Sens. Cardin and Portman would provide a new incentive for employers to offer a more generous automatic enrollment plan, and receive a safe harbor from costly retirement plan rules. It would provide a tax credit for employers that offer the safe harbor plans starting at 6% of pay in addition to the existing safe harbor of 3%. It would also raise the “catch-up” contribution limits to $10,000 from $6,000 for individuals over age 60 with 401(k) plans.

To help employees whose retirement savings are burdened by student loan debt, the bill would allow employers to make a matching contribution to the employee’s retirement account in the amount of his or her student loan payment.

The proposed legislation would also increase the current tax credit for small businesses starting a new retirement plan to as much as $5,000 from $500.

Additionally, the bill proposes to simplify rules for small businesses, including allowing them to self-correct all inadvertent plan violations under the IRS’ Employee Plans Compliance Resolution System without paying IRS fees or needing formal submissions to the IRS. And it would establish a new three-year, $500 per-year tax credit for small businesses that automatically re-enroll plan participants into the employer plan at least once every three years.

Some of the other provisions of the bill include expanding the eligibility of defined contribution plans to include part-time workers that complete between 500 and 1,000 hours of service for two consecutive years; raising the age for required minimum distributions to 72 in 2023 and 75 by 2030, from 70.5 now; and an exception from required minimum distributions for individuals with $100,000 or less in aggregate retirement savings.

The senators cited a 2019 Government Accountability Office report that found that nearly half of all near retirees over age 55 have no retirement savings at all. They also cited a Bureau of Labor Statistics’ National Compensation Survey that shows that nearly one-third (32%) of private sector workers don’t have access to an employer-sponsored plan, and less than half (49%) of all individuals working for small businesses have access to an employer-sponsored plan.

They also said that among those lowest-paid workers, only about one in five earn retirement benefits, with just 22% of low-income workers participating in a retirement plan.

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Tags: Ben Cardin, House Ways & Means Committee, Pension, Retirement Security & Savings Act, Rob Portman