When public pensioners nationwide recently were surveyed about their government-run pensions, six out of 10 believed their retirement “lockbox” was fully funded. Yet recent research shows that view diverges from reality.

According to Pew Trust research, only 70% of state pension liabilities are funded, and this statistic assumes generous fund returns in the years ahead. More realistic calculations show our nation’s public employees face a devastating situation. Unfortunately, some public leaders in U.S. cities and states are playing politics with retirees’ savings rather than responsibly addressing fiscal imbalances.

In various cities and states across the U.S., elected officials have spearheaded efforts for government pension funds to divest from companies involved in fossil-fuel production (oil, coal, gas, etc.). New York City Mayor Bill de Blasio and Comptroller Scott Stringer recently announced the city’s pension funds will sell up to $5 billion of public pension investments in the oil-and-gas industry — not because of poor returns, but because of environmental concerns. Likewise in 2017, Seattle Mayor Ed Murray asked the Seattle City Employees’ Retirement System board to divest holdings in “companies whose primary business is the mining or burning of coal.” Similar divestment efforts have been pushed by officials in California and Washington, D.C.

By putting politics over pensioners, politicians threaten to make already precarious pension systems worse off. Returns from recent years show that politically motivated investing has seriously underperformed.

Take New York City as an example. According to a recent report, 12% of the city pension funds’ 2017 investments were in so-called developed environmental activist assets. Despite this undefined asset class “underperform(ing) the overall funds’ returns by an average of 600 basis points over the last three calendar years,” fund investments in this asset class increased over the past three years. Likewise, the report finds that of the 154 private equity fund investments held by the city’s second largest pension fund, the New York City Employees’ Retirement System, three of the 10 worst performing in 2017 were focused on so-called renewable energy efforts. None of these socially oriented investments was among its top 10 performers.

In other words, divestment will make it harder for public-sector workers to collect the pensions they expect.

Pension funds must invest long-term to meet the anticipated needs of retirees. Every dollar counts, and long-term growth is essential, especially because markets do not always go up. Managing other people’s money is not a trivial pursuit — it demands prudence, patience and perception, not political gamesmanship.

Fortunately, public-sector workers and pension system boards are pushing back against reckless politicians. In New York City, the police pension board recently rejected Messrs. de Blasio’s and Stringer’s fossil-fuel divestment proposal, the firefighter pension board tabled it, and the three other major city pension funds have agreed to study the issue, rather than divest outright.

Considerable evidence

Last summer, caretakers of the $354.7 billion California Public Employees’ Retirement System rejected calls to divest from fossil-fuel companies, noting “there appears to be considerable evidence that divesting is an ineffective strategy for achieving social or political goals, since the usual consequence is often a mere transfer of ownership of divested assets from one investor to another.”

Indeed, politicians’ stated goals of reducing threats posed by climate change will likely not be advanced by politicized investment strategies. U.S. energy companies are some of the largest investors in alternative energy sources, including domestic natural gas. Also, although politicians cite climate change threats in their push for divestment from and lawsuits against energy companies, bonds issued by their communities often downplay those risks.

A large September 2017 New York City bond offering did not even mention the word “climate,” yet four months later Mayor de Blasio touted lawsuits against and divestment from energy companies as necessary to “confront the growing climate crisis.” Likewise, California cities that are suing energy companies claiming harm as a result of climate change described climate risks much differently in their lawsuits than how they described them in their own bond offerings, leading to calls for an SEC investigation.

These hypocrisies aside, on a practical level, many pension funds are desperately hoping eventually to eliminate large funding gaps through exceedingly ambitious (and historically difficult to achieve) annual returns of more than 7% to 8%. Certainly, in an economy re-energized by new federal tax cuts and regulatory reforms, that goal perhaps is more achievable than it was during the previous slow-growth years. Yet, a plan to achieve these sizable returns without investment in one of the nation’s most robust sectors is as divorced from reality as pensioners’ perceptions that the funds are fully funded.

Rather than play political games with other people’s money, politicians should focus on ensuring that promises made to public-sector employees are kept. To keep them in line, public pension boards and community leaders must continue to fight back against self-serving pushes for divestment by public officials whose eyes are focused not on market metrics, but on their own political ambitions.