Exec Comment Costs Blackstone $150 Million Alternative Investment Contract

(March 17, 2011) – New York-based alternatives giant Blackstone Group reportedly missed out on a $150 million New York City police pension-fund investment as a result of comments made last year by Byron Wien, the firm’s chief strategist, who said government retirement benefits are “too generous.”

“We literally can’t afford the benefits we have given our retirees in state and local governments,” Wien was quoted as saying in January 2010. “The retirement benefits for state workers, really not only in New York, California and New Jersey, but throughout the country, are very generous. Too generous.” According to the New York Post, New York and London-based Permal Group, a global alternative asset management firm, was awarded a contract two weeks ago over Blackstone to invest $150 million in police pension money in hedge funds, asserting that Wein’s harsh comments were largely to blame.

In response to the initial uproar over Wien’s comments, Blackstone released a statement in January, saying:

“Blackstone’s view on public employee pensions is clear and unambiguous: We believe a pension is a promise. Working men and women should not have to worry about their retirement security after years of service to their communities. We oppose scapegoating public employees by blaming them for the structural budget deficits that cities and states face. We at Blackstone are committed to helping public employees retire with confidence in the strength and reliability of their pensions.”

Following Wien’s accusations that government retirement benefits are “too generous,” New York City Comptroller John Liu issued a study, entitled “Municipal Employee Compensation in New York City,” which found that New York City municipal employees are paid 17% less on average than their NYC private sector counterparts. “These findings about municipal salaries are an important foundation for any discussion about public employee pensions,” said Comptroller Liu. “The issue of retirement needs to be looked at in the context of the overall compensation package earned by public employees.”