Public Equities, AI Tech Firms Spur 10% Rise for NYC’s Pension Funds

The New York City retirement systems’ five pension funds posted a combined investment return of 10% for the fiscal year ending June 30, raising their aggregate asset value to $274.38 billion from $253.19 billion one year earlier, when the pension funds returned 8%.

It was the second straight year public equities led the pension funds’ investment returns, earning 23% during the year, followed by emerging markets and alternative credit assets, which returned 15.1% and 12.3%, respectively. Private real estate was the worst-performing asset class, losing 7.1%, and was the only one that did not produce a positive return. Private real estate was followed by Treasury inflation-protected securities, or TIPS, and core fixed income, which returned 2.7% and 2.8%, respectively.

The pension funds’ 10% returned topped their actuarial target of 7%, which according to the Office of the New York City Comptroller, translates to $1.81 billion saved over the next five fiscal years. The pension funds also reported annualized three-, five- and seven-year returns of 2.8%, 7.4% and 7.5%, respectively. The below-target three-year returns can be attributed to fiscal 2022, when tanking stocks burdened the pension funds with a combined loss of 8.65%.

“Despite the economic challenges of the past few years, our strategic investment partnerships and careful portfolio management delivered strong returns for New York City’s pension funds and great savings for the city this year,” said New York City Comptroller Brad Lander in a statement. “Our ability to outperform last year’s 8.0% net return reflects the hard work of our talented Bureau of Asset Management team and the resilience and foresight of their investment approach.”

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The pension funds include the Teachers’ Retirement System of NYC, the New York City Employees’ Retirement System, the NYC Police Pension Fund, the NYC Fire Pension Fund and the NYC Board of Education Retirement System. The pension funds are collectively the third largest public pension system in the U.S., according to the New York City Comptroller’s Office.

BERS had the highest return for 2024 at 10.6%, followed by the Police Pension Fund, which earned 10.2%. The Fire Pension Fund and the TRS each returned 10%, while NYCERS returned 9.9%.

As of the end of the end of fiscal year 2024, the pension funds collectively had an asset allocation of approximately 42% in public equities, 32% in public fixed income and 26% in alternatives.

“After several years of unprecedented global economic disruption, I’m pleased with the progress of the net returns we achieved as the markets continued their recovery,” said NYC Retirement Systems CIO Steven Meier in a statement. “However, as we plan for [fiscal] 2025, we must remain prudent and focused on recommending tailored investment opportunities that can ensure strong, consistent returns for years to come.”

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Tags: BERS, Brad Lander, New York City Board of Education Retirement System, New York City Employees' Retirement System (NYCERS), New York City Fire Pension Fund, New York City Police Pension Fund, New York City Teachers’ Retirement System (TRS), Steven Meier

The U.K.’s Financial Conduct Authority fined Coinbase-owned CB Payments more than 3.5 million pounds ($4.5 million) for repeatedly breaching a voluntary requirement intended to prevent the firm from offering services to high-risk customers.

While CB Payments does not engage in cryptocurrency asset transactions for customers, it provides a gateway for customers to trade crypto assets via other entities within the Coinbase Group, according to the FCA. The regulator also noted that the Coinbase unit is not currently registered to provide crypto asset services in the U.K.

According to the FCA, CB Payments agreed to the voluntary requirement in 2020, following “significant engagement” with the regulator over its concerns about the effectiveness of CB Payments’ financial crime control framework. According to the FCA, the purpose of the voluntary requirement was to prevent the Coinbase subsidiary from taking on new high-risk customers while it addressed issues with its framework.

“Despite the restrictions in place, CBPL onboarded and/or provided e-money services to 13,416 high-risk customers,” the FCA stated, adding that approximately 31% of those clients deposited nearly $25 million. It also alleged that the funds were used to make withdrawals and then execute crypto asset transactions worth a total of approximately $226 million through other Coinbase Group entities.

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The breaches were the result of CBPL’s lack of due skill, care and diligence in the design, testing, implementation and monitoring of the controls put in place to ensure that the VREQ was effective,” the FCA stated. “This included failing to consider all of the various ways in which customers might be onboarded when designing the controls. Because of inadequacies in the initial monitoring of compliance with the VREQ, repeated and material breaches went undiscovered for almost two years.”

According to the regulator, the fine is the first FCA enforcement action using powers it was granted under the Electronic Money Regulations enacted in 2011. It also stated that because CB Payments agreed to resolve the matter, it qualified for a 30% discount on the fine, which would have otherwise been about 5 million pounds.

Coinbase did not immediately respond to a request for comment.