Mayor Bloomberg Calls Liu Report on NYC Pensions 'Deeply Flawed'

(June 6, 2011) — A study commissioned by New York City’s Comptroller John C. Liu has predicted that the city’s pension costs will spike in 2016 at roughly $8.3 billion, before heading into a gradual decline.

The report by Liu, a potential 2013 mayoral candidate, contrasts with Mayor Mike Bloomberg’s position that spiking pension costs are hindering the city’s ability to balance its budget. A spokesman for Bloomberg told the Wall Street Journal that Liu’s report is deeply flawed, assuming life-expectancy will not change for example. 

According to the report — titled “Sustainable or Not? NYC Pension Cost Projections through 2060” — pension costs will grow at a slower rate than the city’s economy from 2016 through 2040 and beyond, using up significantly less of its budgeting resources. “Poor market performance over the past decade means we still have a few tough years ahead as those investment losses catch up to us. However, significant reforms already implemented in recent years will drive down costs for decades to come,” Comptroller Liu said in a news release. The Comptroller attributed today’s high pension costs partly to stock market losses.

Teresa Ghilarducci, Director of the New School’s Schwartz Center for Economic Policy Analysis, and a national expert on public pensions and retirement issues added: “The impact of any pension reform takes time to have an effect. This study demonstrates that, over the long-term, New York City’s pension funds provide a secure retirement for firefighters, police officers, teachers, and other City employees at a reasonable cost to taxpayers.”

aiCIO investigated New York City’s underfunded pension system in its Spring issue, revealing the tension between the Mayor and Comptroller. Bloomberg’s goal to reform the City’s pensions operation has not been universally applauded. While Liu is responsible for overseeing New York City’s pension management, Bloomberg hired the City’s first chief investment advisor last year and brought on another senior professional to help run the system’s five pension boards. Insiders claim that Bloomberg favors greater attention to risk management and asset allocation and less emphasis on selecting asset managers, which is primarily Liu’s domain.