NY 1 - October 28, 2011by Bobby Cuza
City officials were joined by municipal union leaders Thursday afternoon to announce an agreement on a new pension system that will consolidate funds under a unified board in hopes of producing higher returns and lowering costs to the city. NY1's Bobby Cuza filed the following report.
Right now, the pensions for city employees reside in five different pension funds, each with their own separate board overseeing investment decisions, with 58 trustees in all. It's a system critics say is inefficient, duplicative and outdated.
"Right now, if we want to make an investment, it's like turning the Queen Mary around in the Hudson River. By the time you do it, you may be going in the wrong direction," said Stephen Cassidy, president of the Uniformed Firefighters Association.
On Thursday, labor leaders joined the mayor and city comptroller to announce a new way of doing business: All five funds will be overseen by a single unified board, which will hire a new chief investment officer, independent of any one elected official, to manage the money. The aim is to produce higher returns and, in turn, lower costs to the city.
"The extra investment dollars that pension funds earn free up city taxpayer dollars that can instead go for police and fire protection and for teachers' salaries or to pay for all the other essential city services," said Mayor Michael Bloomberg.
"In the long term, better governance has proven to result in better investment returns," said City Comptroller John Liu.
Under the arrangement, Liu would voluntarily relinquish some control over investments, drawing effusive praise from a man with whom he does not normally enjoy warm relations: the mayor.
"If you put the name John Liu in this bill, I personally wouldn't have a problem with it," said Bloomberg.
Meanwhile, Bloomberg has antagonized labor leaders by seeking a later retirement age and other major reforms to pension benefits, but on this issue they're behind him, though they'll be watching carefully.
"The one thing for sure is that we will have something to say about the people who will be employed to invest our resources," said Lillian Roberts, executive director of District Council 37.
Bloomberg emphasized that Thursday's announcement is only an agreement in principle. Several details remain to be worked out, and the arrangement requires approval from Albany, which means it's at least several months away from being enacted.