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Newsmakers

Mayor Bloomberg Appoints New York City's First CIO

Ranji H. Nagaswami, an Indian American with a background in the private sector, will assume the $175,000 position.

(August 3, 2010) — Driven by spiraling pension costs and funding shortfalls, Mayor Michael Bloomberg has created New York City’s first chief investment officer.

Ranji H. Nagaswami, an Indian American with more than two decades of private sector experience, will assume the new role of adviser to the mayor’s trustees on the boards of five New York City pension funds with combined assets of about $104 billion. Nagaswami, who came to the US from India in 1984 to attend Yale University, most recently worked as CIO at AllianceBernstein, where she oversaw $100 billion in assets and management.

The decision to create a new post to aid in pension oversight in an arena overseen by City Comptroller John C. Liu reflects a desire by the administration to improve its approach to investments with the help of a “renowned and experienced professional,” Mark LaVorgna, a spokesman for Bloomberg, told the Wall Street Journal. The city’s appointment of a CIO reflects pressure to increase returns and reduce costs to taxpayers.

Nagaswami will additionally replace Bud Larson to become chairwoman of the New York City Employees’ Retirement System (NYCERS), the county’s largest municipal public employee retirement system.

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In a radio address on Friday, Bloomberg noted that the city’s pension contributions have grown from $1.1 billion when he took office to $7.6 billion this fiscal year.

According to a news release from the mayor’s office, Nagaswami’s duties will include conducting research on all relevant investment issues that impact the portfolios, providing the mayor’s pension board trustees with timely investment reviews, reports and presentations, and making recommendations on asset allocation and investment strategy while assisting in negotiating the terms and conditions of investment contracts with managers and banks.

The five city pension funds consist of the New York City Employees’ Retirement System; the Teachers’ Retirement System of the City of New York; the New York City Police Pension Fund; New York City Fire Department Pension Fund; and the New York City Board of Education Retirement System.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742
Home > News > Regulation > Pension Funding Relief Allows Contribution Cut of Up to $63 Billion
Regulation

Pension Funding Relief Allows Contribution Cut of Up to $63 Billion

A recent study by Towers Watson has shown that while legislation recently signed into law could provide a between $19 billion and $63 billion reduction in required contributions over five years, only one-quarter of employers are likely to seek relief.

A study by Towers Watson has shown that as a result of recent legislation signed into law, employers that sponsor defined benefit (DB) pension plans have the potential to receive billions of dollars in temporary pension funding relief, reducing their contributions between $19 billion and $63 billion.

Yet, the study showed only one-quarter of employers will likely seek relief amid significant concerns about the cash-flow rule.

“The pension funding relief law takes a major financial burden off of employers, at least for two years,” Mark Warshawsky, director of retirement research at Towers Watson, told ai5000. “But I was surprised that the percentage of people actually seeking relief was so low,” he said. “It’s obvious that employers are wary of all the conditions that come with the legislation.”

Under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act signed by President Barack Obama on June 25, employers with underfunded DB plans may elect to amortize funding shortfalls for any two plan years between 2008 and 2011 either over a 15-year period or by making interest-only payments for two years followed by seven years of amortization. Generally, DB sponsors are required to amortize shortfalls over seven years. The amount of required contributions depends on which of the two provisions and which plan years employers choose.

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According to Towers Watson analysis, a July survey of 137 Towers Watson consultants on behalf of 367 employers revealed that a quarter of plans are likely to elect either of the relief plans and 60% of those who do plan to opt for the 15-year amortization option.

Prior to the passage of the law, the minimum required contributions in aggregate would have been $78.4 billion for the 2010 plan year, $131 billion for 2011, and about $159 billion for both 2012 and 2013.



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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