Pensions form the backbone of the covenant between communities and the men and women who serve them as firefighters, police officers and teachers. In return for their years of dedication to others, these public servants deserve a secure retirement. The mechanics of retirement funds differ in the private sector but the idea is the same: Work hard, save for your future and you can retire comfortably. Now, however, a disturbing trend of attacking pensions in the name of partisan politics is spreading, threatening even the retirement funds of private-sector companies like American Airlines.
A troubling ruling in a class-action lawsuit illustrates the damage that can happen when politics are injected into decision-making about retirement assets. On Jan. 10, Judge Reed O’Connor of the U.S. District Court for the Northern District of Texas inexplicably found American Airlines breached its fiduciary responsibility to participants in its retirement plan — by employing an asset manager that allegedly considered environmental, social and governance (ESG) objectives.
The asset manager in question, BlackRock, is one of the largest and most successful investment companies. Curiously, American did not even offer BlackRock funds with an ESG focus to its retirement plan participants, preferring instead a slate of index funds that track broad swaths of the market at low cost. In fact, the judge himself declared the airline went above and beyond in its duty to carefully select an investment manager and did not find any of the funds underperformed their benchmarks, meaning the airline’s workers didn’t suffer financial harm from BlackRock’s alleged ESG goals.
Yet, O’Connor’s decision could set back retirement plans and open up many more employers to similar, politically motivated lawsuits, further harming workers who just want the best return on their savings. This suit is just one of many examples of how partisan groups seeking to score points by demonizing ESG are imposing political litmus tests on firms managing retirement assets — substituting their views for the wisdom of the free market. By federal law, American Airlines and other employers are already required to place the financial interests of their retirement plan participants above other considerations. Eliminating large investment managers who offer well-regarded funds at rock-bottom costs hardly seems like a recipe for ensuring workers’ retirement security.
This lawsuit has the potential to strengthen similar efforts by state governments.
Legislation seeking to blacklist or boycott asset managers for various investment preferences has been spreading across states, primarily targeting pensions for public employees but also the private sector. In Missouri, for example, a pair of anti-ESG laws challenged by Securities Industry and Financial Markets Association (SIFMA) argued the rules put unconstitutional restrictions on financial advisers and the state’s law was preempted by long-standing federal jurisdiction in the space. A federal judge issued a permanent statewide injunction in August 2024, stating such regulations were “unconstitutionally vague and also ran afoul of the First Amendment.”
While the Missouri decision was a win for retirees and a blow to those who would use the issue for political gain, the American Airlines case shows how the politicization of investment management is creating a confusing patchwork of rules across states and opens the door to further lawsuits. What’s to stop someone from filing a similar claim against any 401(k) plan sponsor across the country?
As a firefighter who retired with 30 years of service, I’ve dedicated my life to ensuring my fellow firefighters and other public employees have access to the secure retirement they earned. Politics doesn’t belong in pensions or retirement funds. Getting the best return on retirement savings should be the sole focus for all fund managers — whether it’s a private company or public pension. That means choosing the best investments run by the most qualified professionals.
At a time when a retirement crisis is imminent, financial security for American families should never be a partisan issue. We must ensure rulings, like the political one by Judge O’Connor, do not lead to the further politicization of pensions and retirement funds. The future of retirement security depends on it.
