Comptroller Liu Says NYC Pensions Enjoy 6-Month Return of 16%

(February 8, 2011) — New York City Comptroller John C. Liu has said combined 6-month investment returns for the five city pension plans were above 16% for the six months ended December 31. “It is no secret that pension costs are rising and that there is a need to address the issue, but a number of factors contribute to this increase, including investment losses over the past ten years – during which New York City was attacked and suffered through two recessions,” Liu said in a statement.

According to Liu’s testimony on the effects of Governor Andrew M. Cuomo’s recently proposed state budget on New York City’s finances, the aggregate return for the pension funds was 14% for the fiscal year ended June 30, 2010.

Liu is trustee of the five New York City pension funds, which had total assets of $108.6 billion as of November 30. He said Governor Cuomo’s proposed budget would widen the FY 2012 budget gap by $1.4 billion due mainly to loss of education aid and the elimination of revenue sharing.

The Comptroller’s testimony on the state of New York City’s pensions follows proposals by Mayor Michael Bloomberg, who has proposed a major overhaul of the city’s expensive pension system, which he has said would be his administration’s No. 1 priority in Albany. The proposals by Bloomberg reflect the sentiment among mayors and governors around the nation, who describe a bleak state of public schemes, with the picture only getting worse. Already, the governors of New Jersey, California, Washington, Virginia, and Massachusetts have publicly endorsed such reforms. In New Jersey, Governor Chris Christie addressed the state General Assembly on January 11, saying the unfunded liability of the New Jersey Division of Investment would grow to a “staggering” $183 billion from the current $54 billion within three decades. And in his State of the Commonwealth address, Virginia Governor Robert McDonnell proposed that state employees contribute 5% of pay to the $51.9 billion Virginia Retirement System.

“We will work to pass several basic reforms to bring our pension system into the 21st century,” Bloomberg said in his annual State of the City Address last month, describing his mission to solve the city’s looming $2.4 billion deficit. With costs for New York City taxpayers only heading higher, Bloomberg said he wants lawmakers to hike the retirement age for non-uniformed city employees to 65. Additionally, he announced that he wants to reduce the cost of the city’s pension system by consolidating some of its administration and raising the retirement age for new employees.