Maryland pension funds adopt labor standards for private equity

In June, the Maryland State Retirement and Pension System (SRPS) Investment Committee voted to adopt Responsible Workforce Management Principles for its private equity investments. The framework contains nine principles that private equity managers are expected to follow, covering a wide range of workforce protections and rights.

Comptroller Brooke Lierman, who chairs the Investment Committee, said this new policy demonstrates the board’s commitment to the fiduciary goals of the system, noting that companies with well-treated workers are better-run, stronger performers, which leads to better outcomes for pensioners.^[1]

The Maryland Responsible Workforce Management Principles mirror a growing trend among major pension funds. Like the standards adopted by the New York State Common Retirement Fund, California Public Employee Retirement System, and the Illinois State Board of Investment, Maryland’s principles emphasize fair wages and benefits, compliance with labor laws, respect for workers’ right to organize and collectively bargain, workplace safety, and protections in the event of layoffs, restructurings, or bankruptcies.

See PESP’s labor policy comparison here

The vote by Maryland SRPS comes as more public pension funds recognize the risks to workers and communities posed by the private equity industry’s business model.

The value-extractive private equity model can reduce wages, benefits, and staffing at firms it acquires, with devastating consequences for millions of workers, their families, and entire communities.  Private equity firms own over 29,000 companies and employ 13.3 million US workers. Private equity-backed companies have a higher riskof bankruptcy, which often result in layoffs and other workforce harms. As private equity continues to grow as an employer, stakeholders, worker advocates, elected officials, and pension fund trustees have sought to ensure that funds implement worker protections in their investments to safeguard both employees and the long-term sustainability of investments.

This growing trend of public pension funds adopting responsible labor principles is not just about protecting workers, it’s also a critical strategy for protecting the long-term value of retirement investments. Poor labor practices at portfolio companies can lead to operational disruptions, legal liabilities, reputational damage, and ultimately, weaker financial performance. By setting clear labor expectations, pension funds not only safeguard the well-being of millions of workers and their families but also strengthen the resilience of their investments.

The Illinois State Board of Investment’s 2024 Principles state that a company’s workforce is a critical asset and a key component of business success, and that supporting workforce management best practices helps foster economic value creation.

Investors understand that proactive workforce management practices can benefit companies’ performance. Investing in employees through competitive wages and benefits supports value creation. Deloitte, a major financial advisor and consulting firm, found that companies with a program to manage workforce risk reported better performance. Implementing good health and safety practices can reduce costs associated with injuries and illnesses, including workers’ compensation payments, medical expenses, and lost productivity.

All investors that hope to mitigate adverse impacts to workers, financial risks, and reputational damage should adopt specific labor standards across their private equity portfolio that include respecting the right to join a union, fair wages, reasonable working hours, paid leave, non-discrimination, safe working conditions, and protections in the event of layoffs.

^[1]https://www.marylandcomptroller.gov/content/dam/mdcomp/md/media/2025/05-29-2025-workforce-principles-for-portfolio-management-companies.pdf