Unions Say No to Hedge Funds

BRUSSELS, Belgium (AP) -- International trade union leaders on Thursday warned pension funds not to invest in private equity and hedge funds, saying they frequently hurt workers and avoid tax.

The International Trade Union Confederation -- the world's largest union group representing 168 million workers in 153 countries -- said it was advising pension trustees and managers to take extreme care with "casino funds" that they claimed do not live up the hype of outperforming other investments.

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"Pension funds should remain on high alert over unsustainable investments and avoid committing workers' retirement incomes to them," said ITUC General Secretary Guy Ryder.

"The retirement incomes of millions of workers are at stake, and the future for these funds is much less rosy than they would have us believe," he said as the organization launched a report on hedge funds.

Union leaders voted Thursday for investors of workers' capital to exercise caution on these investments until governments tackled regulatory, transparency and sustainability issues.

ITUC, based in Brussels, said pension funds provide more than a quarter of private equity capital but these high-risk investments often damaged employment, wages and working conditions.

It also took a shot at fund managers, saying they received "tens or even hundreds of millions of dollars" in income each year while often paying tax at rates well below ordinary workers.

Calls for hedge funds to be more tightly regulated were ignored when the world's leading industrialized nations, the G-8, met earlier this month.

At the end of 2006, around 9,400 hedge funds operated worldwide, controlling assets of some $1.4 trillion. That is more than twice as many hedge funds as operated five years ago, while funds under management have nearly tripled during the same period, according to Chicago-based Hedge Fund Research Inc.