How Can Pensions Best Protect Against Cybersecurity Threats?

Some funds make costly mistakes when it comes to internet security.


The recent cyber attack on the Missouri teachers’ pension fund, the Public School and Education Employee Retirement Systems (PSERS/PEERS), has exposed just how vulnerable some pensions can be when it comes to internet security. With billions of dollars, data, and personal information on the line, pensions are a prime target for cyber criminals. Unfortunately, however, some officials in the pension world may not take necessary proactive steps to best protect their funds.

“I’ve talked to people who said that ‘cybersecurity is a technical issue, and since we outsource technology, it’s not really my problem,’” said Alan Brill, senior managing director of cyber risk at Kroll, who has testified twice to Congress about the cybersecurity of pension funds in the United States.

The hack at the Missouri fund occurred when an employee’s email account was accessed for less than an hour by someone outside the retirement system without authorization. The pension sent a notification to employees and beneficiaries informing them that “personal information may have been potentially exposed to an unauthorized individual.”

Brill says that just because pensions outsource cybersecurity, it doesn’t mean they can sit back and relax worry-free. “That’s 100% wrong. You are responsible for that data,” Brill said.

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Instead, Brill recommends that pension funds discuss cybersecurity at board meetings at least a couple times a year. During those meetings, he adds, they should be asking questions such as “‘How would we know if an incident occurred? What is the incident response plan? What are our cybersecurity standards?’” If the pension is employing a third party to handle cybersecurity, he encourages the board to direct these questions to the firm it has hired.

Pensions should also ensure they have some sort of 24/7 monitoring of their networks, as opposed to partial monitoring, Brill added. This means most pensions should use an automatic software program built into the server that will immediately alert a security operations center if something goes wrong. “You can’t simply assume that because you didn’t get broken into last week, you’re probably OK in the future,” Brill said.

US pension funds have only recently received federal guidance on best practices for cybersecurity. The Department of Labor (DOL) released a new set of guidelines for plan sponsors, plan fiduciaries, recordkeepers, and plan participants this April. It was the first time the agency’s Employee Benefits Security Administration (EBSA) has issued cybersecurity guidelines.

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Wall Street Job Losses Surge Despite Profits Near Record Highs

The securities industry workforce in New York City is expected to decline by nearly 50% more than it did in 2020.


It’s the best of times and the worst of times for the securities industry in New York, which, despite near-record profits in the first half of the year, is on pace to lose nearly 50% more jobs in 2021 than it did in 2020, according to a report from the state comptroller’s office.

Pre-tax earnings for the securities industry during the first half of 2021 were $31 billion, up from $27.6 billion in the first half of 2020, according to State Comptroller Thomas DiNapoli’s annual report on Wall Street’s performance.

However, the report also forecast the industry to lose 4,900 jobs this year, compared with 3,600 jobs lost in 2020. Although the 3,600 jobs lost in 2020 represent a 2% decline—which is the smallest percentage among other major sectors in the city—it is the steepest annual decline for the securities industry since the Great Recession. By contrast, the city’s financial plan forecast a 5.1% gain in securities employment in 2021, or an addition of 9,200 jobs. The report attributed the concurrence of large profits and large job losses in the city to the combination of technological advances and the relocation of jobs.

“The securities industry’s strong profits have helped shore up tax revenues, and securities industry workers have been among the first to return to the office,” DiNapoli said in a statement. “Financial markets move in cycles, however, and profits will subside at some point. As we prepare for an eventual slowdown in Wall Street’s record activity, we need to ensure New York’s Main Street, and its other vital sectors, are also recovering.”

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The comptroller’s office measures securities industry performance by the pre-tax profits of the broker/dealer (B/D) operations of New York Stock Exchange (NYSE) member firms. It said there are approximately 125 member firms, down from more than 200 in 2007 before the global financial crisis.

The strong first-half profits were attributed to most of the same factors that resulted in last year’s robust profits, such as record-low interest rates that kept expenses down, strong trading volume, record earnings in subsectors such as global equities, and record revenue from underwriting and account supervision fees and investment advisory fees. Although third quarter results show continued strength, the report said there is a risk that the industry’s profit growth will slow as interest rates rise and federal monetary stimulus wanes.

The average salary for New York City securities industry employees in 2020, including bonuses, was $438,450, which was up 7.8% from a $406,854 average salary in 2019. And, since 2007, the industry’s average salary in New York has been the highest in the US, with the average salary nearly five times higher than the average in the rest of the private sector. In contrast, the average salary in the securities industry was only twice the average in the rest of the private sector in 1981. And the average bonuses paid to New York City securities industry workers grew by 10% to $184,000 in 2020.

Wall Street makes up just 5.2% of the city’s private-sector workforce; however, it made up 20% of all wages paid in the city last year and 55% of all private-sector bonus payments, according to the report. It also was responsible for 14% of all economic activity in the city, which was more than any other industry.

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