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Kentucky’s Teacher Retirement System was the second largest US institutional holder in a major Russian bank, lost millions due to sanctions


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The Kentucky Pension System is nationally known to be severely underfunded. This fund encompasses the retirement security of state and local government employees and teachers. According to the Kentucky Chamber of Commerce, the pension system faces $36 billion in unfunded liabilities as of 2015. 

The Kentucky Teachers’ Retirement System specifically had 13.9 billion in unfunded liabilities and 55.3 percent funded. However, this crisis does negatively affect Kentucky taxpayers. 

The underfunding had national agencies downgrade Kentucky’s credit rating. As a result, Kentucky lawmakers have long sought to revamp the pension system to ensure solvency for current and future retirees.  

However, the Kentucky Teachers’ Retirement System recently took a $12 million loss. 

Western Sanctions Against Russia

In a series of harsh economic sanctions announced by Western countries against Russia for its invasion of Ukraine, one of Russia’s largest lender Sberbank (SBER.MM), says it is pulling out of Europe

“In the current environment, Sberbank has decided to withdraw from the European market,” it said on Wednesday in a statement carried by Russian news agencies.

The state-controlled bank’s European subsidiaries were experiencing “abnormal cash outflows and threats to the safety of employees and branches,” it added.

The news came on Wednesday as state-controlled Sberbank reported record annual profits for 2021. This caused Sberbank’s London-listed shares to plunge 95%.

The move highlights the pressure some Russian businesses are facing from unprecedented steps by the West to isolate Moscow, including sanctions on its central bank and the exclusion of some of its banks from global payments system SWIFT.

What you need to know

Reports that Kentucky’s pension system for teachers is one of the top shareholders in the largest Russian bank are “completely false,” the system’s lawyer said Friday.

At the close of 2021, the Kentucky Teachers Retirement System was listed as the second largest shareholder of Sberbank of Russia, whose stock prices are tanking amid the Russian invasion of Ukraine, the Courier Journal reports

Beau Barnes, TRS’ general counsel, said TRS has “no significant investments” in Russia.

Barnes states that about $30 million of TRS’s $26 billion investment portfolio — around 0.12% — is in Russian investments. 

Around 0.05% of TRS’s portfolio is specifically in Russian banks, including Sberbank. At the end of 2021, their Sberbank shares were valued at around $13.6 million.

Barnes said that all of TRS’s Russian investments are through its international managers. It has no internally managed Russian investments.

The Kentucky Public Pension Authority holds around $51 million in Russian investments, a state treasurer’s office spokeswoman said. The funds, which equal roughly 0.23% of its overall $22 billion portfolio, include direct and indirectly managed investments.

However, in reviewing their pension stock portfolio, they are currently listed as holding over 860,000 shares in Sberbank. Overall, they hold the second largest number of institutional shares in this state controlled bank. 

Russian bank shares, Kentucky Teacher Retirement Fund
Source: Nasdaq Review on 04March2022. Link:

Other states have recently pulled out of Russian assets because the country invaded Ukraine. For example, Connecticut pulled more than $218 million in pension funds from Russian companies earlier this week.

U.S. Rep. Thomas Massie, a Republican representing Northern Kentucky, called the TRS investment “unfortunate.” 

“Kentucky Teachers Retirement System was the 2nd largest U.S. ‘institutional’ holder in the Sberbank or Russia. It’s obviously part of a much larger portfolio, but still unfortunate and notable,” Massie tweeted Friday morning. 

Editors Note: The first and third largest institutional holders Todd Asset Management LLC and Renaissance Investment Management are both Kentucky based investment management firms. 

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