Rep. Vargas Helps Introduce Legislation to Protect Federal Pensions from Economic Impact of Climate Change
WASHINGTON – U.S. Representative Juan Vargas (CA-52) joined U.S. Representatives Emanuel Cleaver, II (MO-05) and Rashida Tlaib (MI-12) in introducing the Restructuring Environmentally Sound Pensions in Order to Negate Disaster (RESPOND) Act. The legislation would require the Federal Retirement Thrift Investment Board (FRTIB) to conduct a thorough assessment to determine the extent to which federal workers’ pensions are exposed to climate-related financial risks.
The lack of a climate-related risk assessment leaves the pensions of millions of federal employees vulnerable to the economic consequences of climate change–opening them up to potential for financial losses now and in the decades to come. Under the bill, if the Board finds these risks to be legitimate after completing an assessment, the Board would be required to prepare and implement a strategy to transition the pension program’s holdings to better insulate retirement benefits from these risks.
“California’s 52nd Congressional District is home to over 17,000 federal workers,” said Rep. Vargas. “These workers should be able to rest assured that their retirement funds are prepared to deal with the economic consequences of climate change. That’s why we introduced the RESPOND Act.”
The FRTIB currently oversees $770 billion in retirement benefits for millions of federal employees. The RESPOND Act would take steps to protect these retirement benefits by:
- Requiring the FRTIB to establish a "Federal Advisory Panel on Climate Change" to conduct a thorough examination of the financial risks posed by climate change to federal employee retirement benefits and report those findings to Congress.
- Instructing the FRTIB to immediately set a plan in place to divest from corporate polluters if the FRTIB determines that pension yields would be both financially profitable and consistent with fiduciary duties if divestment strategies were implemented.
- Implementing a "Climate-Choice" investment option to allow federal pension holders to opt into an investment plan that is completely divested from fossil fuels if the FRTIB is unable to make a conclusive determination on whether divestment strategies align with their fiduciary responsibilities to pensioners.
- Requiring the Federal Reserve and SEC to jointly issue annual reports on the financial risks of climate change to ensure the federal government is doing its due diligence to fully understand and account for these risks and costs in future projections.
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