Indiana is supposed to invest public employee retirement funds with just one goal in mind: profit.
Poor administration and regulatory carveouts have ensured that is not the case. A state law is instead benefiting banks and foreign countries while exposing investments to political risk at retirees’ expense.
That needs to change. The Indiana Public Retirement System needs stronger regulations that limit risky foreign investments and put Indiana residents first.
Investment regulations are poorly written and enforced
Indiana banned INPRS from making politically motivated investments based on environmental, social and governance standards in 2023. It also banned INPRS from using investment managers that do so.
State Treasurer Daniel Elliott then used the law to initiate a review that led to BlackRock’s removal as an investment manager.
Laura Loomer, a right-wing influencer, recently wrote a scathing post on social media blaming Elliott for allowing State Street, an equally controversial company, to take BlackRock’s place. It wasn’t his fault, though, as a carveout in the law left few other options.
“The exclusion of bank holding companies and their subsidiaries from the anti-ESG statute limits the scope of enforcement actions by INPRS and the treasurer of the state,” Carolina Rodríguez, public affairs specialist for INPRS, told me.
Rodríguez also clarified that the investments managed by BlackRock did not change “in any material way” when State Street took over.
State Street, like BlackRock, has a history of making politically motivated decisions that directly impact investments. Indiana Attorney General Todd Rokita joined a lawsuit against both firms, as well as Vanguard, alleging they illegally conspired to manipulate energy markets against coal.
Since State Street has a history of politically motivated investments, the public retirement system clearly needs stronger regulatory guidance to fully consider all types of investment risks.
Indiana’s foreign investments are exposed to political risk
Around half of INPRS’ public stock portfolio and about 36% of its investments in bonds and similar debt securities are invested overseas. Rodríguez told me the “prudent investor” standard in Indiana law “obligates fiduciary investors to diversify their holdings.”
Foreign stocks and bonds can make good returns — until they don’t. Many investments are risky.
Indiana banned the public retirement system from investing in China in 2023 due to national security concerns. I wrote a column last year revealing INPRS still had investments in Hong Kong, a special administrative region of China. INPRS then divested around $170 million, to its credit, at the behest of state Sen. Chris Garten, R-Charlestown.
That comes after INPRS ignored the warning signs that preceded Russia’s invasion of Ukraine and subsequent U.S. sanctions and got stuck with more than $2 million in Russian assets.
INPRS has also invested more than $60 million in Turkish bonds. Between 2024 and 2025, some of those bonds dropped significantly in value. The ongoing war in Iran, meanwhile, has put a spotlight on increasing tension between the U.S. and Turkey.
INPRS has nearly $3 million invested in bonds in the Republic of Senegal. Those bonds lost significant value between 2024 and 2025 because the country’s government concealed $7 billion in borrowing.
INPRS also has more than $500 million invested in Japan. The value of some of those stocks dropped significantly between 2024 and 2025 likely in part because of the country’s changing monetary policy.
Even some domestic investments raise questions. INPRS holds more than $1.7 million in bonds from Illinois, which has the lowest credit rating of any state in the nation.
Indiana should invest in the state first
Investing in out-of-state and foreign companies exposes the retirement fund to political and economic risks outside local control.
As such, state leaders should require the public retirement system to invest no more than 30% of its stock and bond portfolio in foreign entities — a limit that would still allow diversification while reducing exposure to geopolitical risk. Legislators should also require the public retirement system to invest at least 10% of its stock portfolio in Indiana companies.
There are several extremely high-performing companies headquartered in Indiana already, including Eli Lilly, Cummins and Elevance Health. INPRS has already invested more than $30 million in them.
Surely the state could invest a little more in Indiana and continue generating strong returns for public employees.
Contact Jacob Stewart at 317-444-4683 or jacob.stewart@indystar.com. Follow him on X, Instagram, Facebook and TikTok.
This article originally appeared on Indianapolis Star: Indiana should stop gambling pension money overseas | Opinion
Reporting by Jacob Stewart, Indianapolis Star / Indianapolis Star
USA TODAY Network via Reuters Connect
