State officials celebrate as public pension system completes Chinese divestment
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The Indiana Public Retirement System (INPRS) finished shedding its $1.2 billion worth of investments in Chinese entities this month — four years ahead of schedule — state officials said Wednesday.
Comptroller Elise Nieshalla and Treasurer Daniel Elliott, both Republicans, celebrated the pension system’s “speedy action” following 2023 legislation requiring divestment.
“China is one of the foremost threats against our country’s national security, and INPRS has nobly exceeding the parameters set forth in the law by divesting Hoosier’s pension dollars from China ASAP,” Nieshalla said.
“By divesting from China and focusing on investments in countries that value the principles of democracy, capitalism and freedom, we are safeguarding the best financial interest of Hoosiers and our nation,” Elliott said.
They commended Senate Enrolled Act 268‘s authors — GOP Sens. Chris Garten of Charlestown, Aaron Freeman of Indianapolis and Travis Holdman of Markle — for “passing this necessary, common-sense legislation.”
Garten also commended INPRS in a statement Wednesday for “making quick work of this divestment.”
“As tensions continue to rise between the U.S. and China, removing the possibility of China freezing U.S. assets and harming public employees is simply good policy,” Garten said. “It is extremely important for us to continue to protect Indiana’s economic stability and keep Hoosier money out of the hands of adversarial states.”
Pulling out of China
INPRS has nearly 530,000 members from more than 13,000 public employers across the state. It manages more than $46.6 billion on their behalf.
The legislation required the pension system to divest from any entities on a variety of federal lists of Chinese companies that do military or intelligence work, or that are controlled by the Chinese government and its ruling political party.
INPRS leaders said that, at the beginning of 2023, the pension system had $1.2 billion invested in China and that $486 million fell under the ban.
The legislation additionally set out a timeline: divest from 50% of any holding within three years of discovering a banned connection to China, 75% within four years, and 100% by five years.
INPRS did the work in about a year.
The law went into effect upon passage — May 1, 2023 — and divestment was done by July 1, 2024, per the news release.
Garten noted several other states have modeled legislation after Indiana’s effort in the last year, including Florida, Kansas, Missouri and Oklahoma.
“It is great to see Indiana lead the charge on an issue that impacts not only Hoosiers, but all Americans,” he said.
International affairs prominent in INPRS legislation
China is not the only country from which INPRS has divested.
State law bans investments in Sudan, and the system pulled out of Ukraine following Russia’s 2022 invasion. INPRS lost $200 million in two months in the sudden war’s financial chaos.
The pension system also follows other special instructions.
It complies with federal Biden- and Trump-era restrictions on Chinese military companies and surveillance technology businesses, as well as a public trading ban on foreign companies with opaque public accounting firms.
INPRS also follows state rules barring investment in companies that use environmental, social and governmental considerations in investment decisions; anti-Israeli companies; and countries that sponsor terrorism.
The Indiana Capital Chronicle is an independent, not-for-profit news organization that covers state government, policy and elections.