Pension promises, product liability and goulash
The Untaken Safer Alternative Path and its fiduciary recipe for a dignified future
Toss a rotted onion in a pot with rancid meats (rank tofu for the vegans) and random mushrooms you find in your lawn and you get a stew – albeit a less safe stew compared to the same recipe whipped up with ingredients that are fresher and nourishing.
As it turns out, it’s not obvious that you can choose the safer option. The chef insists:
There is no alternative stew, so take the stew you get
Your wellbeing is not the goal of stew making
Stew ingredients at the market are limited, without considering alternatives
A long-term stable shelf life is not a concern of this stew
“Stay out of the kitchen!”
Making a bad stew for yourself is one thing. Pretending a bad stew is a good stew to sell to someone else is a recipe for product liability.
Safety first — to switch to the topic — is not how fiduciaries of public pensions evaluate their ingredients or execute the recipe in the common practice of delivering the pension promise – or stew. As a pension participant, you might think you’re getting fresh, organic, farm-to-pot, non-GMO, non-CAFO, in season, free-range ingredients, but there is no reason for your confidence.
Status quo fiduciaries focus on financial excellence now at the expense of a quality product later – even if that later product is the real measure of their success. As bad stew practice, that means pension fiduciaries are focused on extracting value by trading ingredients based on price rather than their quality or relevance to the end product. A gumbo might thicken with a roux of flour and oil, but not oil dug from a well.
Worse, common practice fiduciaries think they are cooking so well that there is no room for improvements to enhance quality and safety. Their declaration that “There is No Alternative” to how they make stew is the admission that it’s good enough for fiduciaries to get something stew-adjacent hot on a plate. Yum!
Fiduciaries sell a worry-free future
If you’ve been following the Bank of Nature development, you’ve heard of The Untaken Safer Alternative Path — a way to to pay for the future that is safer than current common practice and is consistent with how fiduciary money is designed.
We borrow this idea from product liability law and are using it in pension law to highlight safer options in curating that future that are not yet considered – which matters because of the trillion-dollar power and purpose of pensions to dominate the economy and define everyone’s future.
Product A is dangerous. Maybe it’s a faulty design or flawed process and it creates immediate and legacy problems for users and others
Product B does the same task as A and is safer without the same risks as A
Continue with Product A when Product B is a safer alternative and expect calls from personal injury lawyers.
We have established that pensions are futures bought on layaway and fiduciaries make a product. Manufacturers have a [fiduciary] responsibility to protect their customers.
Fiduciaries of public pensions produce something like insurance, but kicked off with a retirement party instead of a tragedy. You don’t have to be owed a pension to know that regular insurance premiums are paid by you now so that you, or your survivors, are taken care of financially whenever the benefit is triggered. It’s the cost of having confidence in the future.
This fiduciary product takes away worry and comes with expectations. If it’s a goulash, it’s going to be delicious. Would you have knowingly bought bad goulash otherwise?
The buyers of the pension product are already paying for their retirements, maybe decades away. They aren't gifts. They are life-support systems bought now to use whenever required. That’s the deal, for example, for active Massachusetts public sector workers, regardless of years on the job, who pay 9% per paycheck toward the Pension Reserves Investment Management (PRIM) system.
As we explore in Senate Bill 1644, we want a better grade of execution in the fiduciary sector because it’s what the beneficiaries are owed and what provides a benefit to everyone. Massachusetts General Law Chapter 32 is the recipe managing PRIM’s retirement promise for 300,000 public service workers either still on-the-clock and already retired. This particular recipe is a trust document with all the rules in managing $97 billion in ingredients to make its PRIT stew.
It’s the difference between “just getting it done” and “just getting it done safely.” Ubiquitous fiduciary common practice is the former. Senate Bill 1644 offers the latter.
Fiduciaries are stew-ards
We talk of fiduciaries as curators of the future. Importantly, the PRIM board has the fiduciary discretion to buy and approve the best ingredients and, when it can’t find the right ingredients, negotiate with suppliers to procure them. It is the power of a good shopping budget to have options – and chefs should be allowed stylistic flourishes as long as quality can be defended as Top Chef.
Unfortunately, like other fiduciaries around the world, PRIM’s recipe is undisclosed beyond vague categories. As is the case with current fiduciary common practice, the chefs themselves may not know. They job out the stew-making to non chefs – otherwise called non fiduciary third-party asset managers more concerned with variable pricing of the ingredients rather than the ingredients themselves.
The result is that current buyers of PRIM’s stew can’t actually know whether it’s loaded with salt or is keto-friendly — or whether meat and onions are premium, seconds or actual food. If they have a shellfish allergy, they can’t know if it’s étouffée or, if they keep kosher, they can’t know if it’s Julia Child’s cassoulet.
Fiduciaries are deep in the waters of product liability
As we argue at Bank of Nature, current pension products are made with design defects, bad processes, inferior parts and a lack of concern for the end user who is expecting quality, reliability and safety. Two cautionary tales:
Lead paint is an environmental toxin. No exposure to lead is safe. It causes developmental issues in teething children who gnaw on lead-painted window sills. Many parts of the world banned lead paint – like the US in 1978 – but, as recently as 2015, you could buy leaded paint made by a Sherwin-Williams licensee in Lebanon. For its part Sherwin-Williams, which sold $22-billion worth of product in 2022, identified lead paint as a poison in 1904 but continued to make and sell lead paint, according to one report, until 1937. Legacy damage from the decision to stick with leaded paint when there was a safer alternative is the backdrop of a settlement in California for which Sherwin Williams and others funded a $305-million lead paint abatement program. However, the underwriters are now challenging the settlement.
Also in California, the current case called Gilead v. Superior Court claims that pharmaceutical company Gilead, maker and seller of an HIV drug with serious side effects, slow-rolled its next viable iteration of the drug that does the same task and is arguably safer – to maximize the business of the first drug. All this, while Gilead claims that “Patient safety is paramount to us.”
“A decision in favor of the plaintiffs would create a new “duty to innovate” under which a drug manufacturer could be liable for failing to develop a different drug that, in 20/20 hindsight, might have been better for some patients,” said expert Steven Boranian in September.
Take a moment to acknowledge the genius of a “Duty to Innovate”.
It’s not a stretch to see that fiduciaries have similar liabilities in delivering the dignified retirements purchased by pension promisees. There is a safer way to get to the future than what fiduciaries are using – ostensibly they are using leaded paint when non-leaded paint is available. If they are not trying to innovate safer ways to achieve the goal of dignified future – in all its meanings – fiduciaries are breaching the Duty to Try Harder. They are flirting with liability and if sufferers of lead paint effects can sue retroactively, then shafted future buyers can point to this time in history when needless risks were used in production of their pensions.
Thankfully, public pension portfolios are not subject to patented formulae, R&D costs, expensive FDA oversight or shareholder pressure to slow-roll a Safer Alternative Path. Pensions are not predatory or competitive or vying for market share – so betting on market trends as the mode of making stew is out of character. By design, they are collaborative and bound by different performance metrics than a company like Gilead.
Cavet Emptor v. Caveat Venditor
Senate Bill 1644 is warning pension buyers that they have a caveat emptor red flag to manage their retirement supplier right now. Senate Bill 1644 is also putting fiduciaries on notice that the future is, indeed, a product of their making.
That makes product liability cases directly relevant.
In a layaway purchasing agreement, the seller is responsible for delivery of the product unmolested and in as-new condition whenever it’s paid up. If I pre-order a condominium not yet built, it better look like the brochure when I’m ready to move in.
Unlike other products sold with warning labels, current pension buyers are not alerted to the potential that the future they have bought today may not be what has been advertised when they collect it. To managed expectations, let’s try and make this true: “The fiduciary is not responsible for the climate change you might suffer in the future.”
With that in mind, minimizing the role of fiduciary duty means quality assurance measures are not in place to ensure the process of making the product does not destroy the product. Mass marketed stew can be recalled simply because it wasn’t properly inspected, regardless of any risk of adverse effects.
Blueprints, machinery maintenance and cleanliness, assembly specs, tolerance margins, materials sourcing, component integrity, labor, outsourcing and safeguards, among other methods of production, are key. If the inputs are unsafe, the product is unsafe.
Distribution of the product can reflect the fairness in access, transparency and disclosure – and for pension fiduciaries, the fulfillment of impartiality. Likewise, returns, refunds and rebates are available to unsatisfied buyers of products. SB1644 is an offer to avoid that risk — and protect both buyers and sellers of the pension promise.
It’s non fiduciary to produce a pension promise as currently done when a safer alternative can do the same job. Our initiative requires everyone to be curious about how we pay for the future — without food poisoning. We'll tell you what's in our stewardship stew in a future post. Additionally, I invite you to send us your plans for a safer pension product. ian@bankofnature.eco
In the meantime, who’s hungry?