Florida state employees can invest in 'terror-free' retirement accounts

By Josh Hafenbrack
TALLAHASSEE BUREAU
June 5, 2009

TALLAHASSEE — Florida's teachers and other public employees will soon have a politically conscious alternative for their retirement accounts: a "terror-free" fund.

Gov. Charlie Crist this week signed into law a first-of-its-kind program to create a retirement plan, similar to a 401(k) in the private sector that does not invest in businesses with interests in Iran and Sudan.

Some 121,000 teachers and government workers in the state's defined-contribution program — with assets valued at $4 billion — would be eligible to invest in the "terror-free" fund, although it's unknown how many would elect to do so. New employees enrolling in the Florida Retirement System also could sign up.

"We will show Wall Street and the firms that offer these products, the big fund managers, that there's a market for this," said Sen. Ted Deutch, D-Boca Raton, who led the effort. "Individuals can stand up against genocide in Darfur and Iran's quest for nuclear weapons."

The new law won't affect the state's traditional pension plan, where most state workers have their retirement accounts. In 2007, Florida became the first state to divest holdings in its $100 billion pension fund from companies with ties to Iran and Sudan. Since then, the state has withdrawn $1.1 billion from such companies.

The "terror-free" fund will be offered as part of an optional state retirement program that operates similar to a 401(k). The state contributes a set amount for each enrolled employee — 9 percent this year — and the money is invested in stocks, bonds and money markets.

After Crist's signature, the State Board of Administration is aiming to have a fund purged of companies with ties to the two countries' oil-driven economies by the end of the year.

Pro-Israel groups are touting Florida as leading an effort to use American financial muscle to push back against a nuclear-armed Iran. Deutch and groups such as United Against Nuclear Iran held a Web seminar last week to talk about spreading "terror-free" retirement funds to other communities and states.

"The idea of [the threat from Iran] getting local is very important," said Joe Kildea, spokesman for the anti-Iran group. "This shows there are things going on at a grass-roots level of government that can make a difference."

Deutch said the retirement accounts are a way individual state workers can get involved.

"This is not just about trying to make people feel good," he said. "There is a finite period of time we have to prevent the Iranians from having nuclear weapons."

But from a dollars-and-cents perspective, does it make sense for workers to build an investment portfolio without ties to oil-rich Iran? That depends largely on the price at the pump, said Ron Poppell, who runs the state's defined-contribution retirement program.

"A couple of years ago when oil prices were sky high, it probably would not have been a good deal," he said. "But when oil prices fell like a rock, the yield probably would've been pretty good."

Josh Hafenbrack can be reached at jhafenbrack@sun-sentinel.com