Massachusetts pension fund adopts labor policy for private markets
December 17, 2025
On December 4, the Massachusetts Pension Reserves Investment Management (MassPRIM) Board unanimously adopted[1] a Responsible Workforce Management Policy for private market investments. Given the pension fund’s strong proxy voting guidelines for public investments, PRIM staff and board members recognized the need to systematize private market assessment in the same way.
The policy aims to manage potential labor-related risks within MassPRIM’s portfolio and includes five key principles: the elimination of forced and compulsory labor and child labor, non-discrimination, fair pay, health and safety, and freedom of association. MassPRIM will implement the policy by sharing it with investors and requiring confirmation of receipt, incorporating the policy in due diligence processes, and engaging managers around policy alignment.
Mass PRIM joins a growing number of pension fund investors that have adopted labor standards for private investment managers. In recent years, California Public Employees’ Retirement System, New York State Common Retirement Fund, Illinois State Board of Investment, and Maryland State Retirement and Pension System Board of Trustees have all created policies that recognize protecting workers as critical to fiduciary duty. In addition, unions such as the AFTand Laborers International Union of North America have shared principles that can be incorporated into investor due diligence practices.
Private equity’s value-extractive 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 risk of 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 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.
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 responsible workforce principles 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] See page 63.
