State Treasurer Deborah B. Goldberg announced the inclusion of pension fund diversity benchmarks in the final version of H.4887/S.2842, An Act enabling partnerships for growth.
Treasurer Goldberg, who is the Chair of the Massachusetts Pension Reserves Investment Management Board (PRIM), strongly advocated for the amendment and worked directly with Representative Chynah Tyler and Senator Paul Feeney, who filed the bill. The Massachusetts State Legislature approved the Act last week. It was signed by Gov. Charles Baker Thursday night.
The amendment will increase the diversity of investment managers that manage the approximately $80 billion Massachusetts Pension Reserves Investment Trust Fund (PRIT) to at least 20 percent. In addition, it will also advance the diversity of consultants contracting with PRIM to at least 20 percent.
“Our goal is to help level the playing field and increase access for minorities, women, and disabled investment managers and consultants,” stated Goldberg. “In doing so, we seek to ensure that opportunities with the state pension fund will enhance economic equity in the business community for generations to come.”
In its 2019 Survey of Consumer Finances, the Federal Reserve Board found that the median net worth of a black American family stood at $24,100, in comparison to that of a white American family at $142,500. Business development that combats barriers for communities of color is an effective tool to reduce and reverse the negative impacts of the racial wealth gap.
PRIM will be required to take affirmative steps to increase diversity and to report to the legislature on its progress. This effort must include consideration of whether current investment policy discourages the use of minority investment managers through quantitative or qualitative restrictions, including, but not limited to, the number of years, track record, and minimum assets under management. Research in this space shows that these requirements severely limit the number of diverse managers that meet the policy’s criteria, without a demonstrable impact on returns.
Working with the Legislature and PRIM Board, Treasurer Goldberg has made important progress to strengthen diversity within investments, businesses, and our economy. Goldberg has supported and proposed many policies that ensure sustained value for the fund, while fostering long-term growth.