Mayor Mike Bloomberg and City Comptroller John Liu laid out a proposal for a massive overhaul of the city’s $120 billion pension system at City Hall this afternoon.
The plan would consolidate oversight of the city’s five pension boards under one authority supported by an independent, full-time staff led by a Chief Investment Officer, who would be appointed to a fixed term.
Mayor Bloomberg and Comptroller Liu have had an extremely antagonistic relationship since Mr. Liu served on the City Council, one that only worsened when Mr. Liu was elected citywide in 2009. Then, Mr. Liu rebuffed Mr. Bloomberg’s efforts for a pre-term meeting.
But today both had high praise for one another, and pointed to the agreement as proof that they could put aside their differences.
“In Washington these days, government seems to be hopelessly gridlocked, with each party stressing only what keeps them apart,” said Mayor Bloomberg. “But in New York City, we thankfully act differently – bridging differences and bringing people together to find common ground on the toughest issues and working together for the good of all New Yorkers. We’re overhauling an antiquated pension management system that has needed restructuring for generations – depoliticizing the process, further professionalizing the staff and implementing industry best practices.”
Added Mr. Liu:
“The city’s pension system dates back more than one-hundred and fifty years. This new paradigm will enable us to achieve better results in today’s more complex financial markets. Depoliticizing, professionalizing, and streamlining the management of our pension funds will enhance investment returns and reduce pension costs. Our labor leaders and trustees have delivered a huge win for taxpayers and city workers alike with this game-changer.”
The proposal is intended to insulate management of pension assets from any political office, increase investment returns, guard against the possibility of fraud and corruption.
The new agreement has marked benefits for both officials. Reforming the pension system has been high on Mayor Bloomberg’s wish list for his third term. Earlier this year, the mayor appointed a “chief pension officer,” a move that was seen as a ploy to swipe some of Mr. Liu’s power.
For his part, Mr. Liu has been under fire recently for campaign finance irregularities and for some questionable hires. The move today is likely to boost his good government bonafides.
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It might reduce the chance of the kind of abuse we have seen under Hevesi, but that’s nickels and dimes compared with the much larger form of pension corruption — politicians enacting unfunded, retroactive pension enhancements in exchange for political support from public employee unions, and putting off paying by claiming the enhancements cost nothing.
That’s why pension costs have soared. They give someone about to retire earlier retirement on better terms (or already retired, as has sometimes been the case), and the pension funds are instantly in the hole all the additional money that should have been put aside during their careers for their richer pensions, and all the investment returns on that money.
The City Actuary is supposedly independent too.
And does this eliminate or at least reduce the possiblitiy that the city pension funds will vote their shares to cut executive pay and use the savings to increase dividend payouts to investors — across the board? I’ve been hoping for something like that. Who is going to appoint this Chief Investment Officer?