Private equity firms and public pension systems have enjoyed a symbiotic relationship for years, with the latter providing the capital (about 35% of private equity capital comes from public pension systems) to the former to invest with the hope that significant returns can be achieved. However, this relationship may be changing as a result of the perceived mistreatment of workers through the actions of private equity firms.

The NY Times is reporting on how former workers for Toys “R” Us have rallied support from public pension systems when their demands from private equity firms went unheeded. Roughly 30,000 workers lost jobs when the former retailer went bankrupt last year, and worse, they did not receive any severance.

Participants in both public employee and union funds loath to see their pension assets used to harm other workers. Having failed in their quest to be heard by the private equity firms involved in the demise of their company, former employees took their case directly to the public pension systems that helped fund the acquisition. During a 3-month period, these former employees and their advocates (Rise Up Retail and the Private Equity Stakeholder Project) met with 14 public funds in 12 different states to begin to exert some control over just how these pension assets can be invested – it is about time!