N.Y. city public pensions “hanging by a thread.”

Hanging+by+a+thread

In Illinois, the most obvious pension theft is the failure of the state to meet their contribution obligations over decades, resulting in a $110 billion pension liability. Our pension dollars were then used to fund other state services, keeping taxes artificially low.

The New York Times is reporting that the New York city pensions of firemen, police and teachers are “hanging by a thread” due to Wall Street looting and the failure of the city to monitor the fees and profits of Wall Street pension investment managers.

The retirement system has long been plagued by accusations that it has delivered inadequate returns and is in need of a management overhaul. The bureau has around 100 employees and hires Wall Street firms to manage its money. A 2015 report by Mr. Stringer showed that over the past 10 years, those managers took in billions of dollars in fees yet failed to meet fund benchmarks. More than a decade ago, another independent reportalso found fault with the way the system was managed.

The Times also noted:

All in all, the Funston review made more than 200 recommendations, many underscoring the fact that the retirement system has not kept up with the times.

For example, the report noted that the complexity of the system’s assets has exploded in recent years, as more money has been invested in hedge funds and private equity.

But the report found that there were just two people monitoring the $10 billion that the system has invested in private equity. “It is not possible for two individuals to monitor nearly 200 partnerships from 115 managers in a manner so as to properly fulfill fiduciary responsibilities,” the report concluded.

Mr. Stringer estimated it would take five to 10 years to get the Bureau of Asset Management to where it needs to be. The report concluded the bureau currently “has little or no capacity to implement many of the recommendations of this report.”

What percentage of Illinois public pensions are invested in the same kind of high risk, alternative investment plans as New York?

Nobody seems to be able or willing to say.

Are there hidden fees?

Can’t say.

Writes David Sirota:

The secrecy trend is spreading throughout the country. Last month, for instance, Illinois officials denied an open records request for information identifying which financial firms are managing that state’s pension money. Like their Kentucky counterparts, Illinois officials asserted that the firms’ identities “constitute trade secrets.” Illinois’ Freedom of Information Act includes special exemptions for information about private equity firms.

4 thoughts on “N.Y. city public pensions “hanging by a thread.”

  1. Fred it’s hard to link on my mobile but go to nakedcapitalism. They have lots and I mean lots on this topic especially California teachers. They are considered he smartest of the public pension funds. Wall Street thinks of our funds as rubes to be robbed. Nevada just invests in an index fund. I know New York courts require payment whereas ours said clearly its contract with the state not a fund so I don’t know who is in trouble. Except the Wall Street crooks should be but you know…they won’t be.

  2. Levered beta boy s first post today. It means your fund is not doing well but mom tells the boy dad is doing well because he is still paid very well….
    They make up a lot of bullshit words. I am always happy to explain but we should all pay attention because despite their bullshit..we public pensioners are the biggest sucker I mean customer of wall street ….

  3. Wall Street financial advisors are opaque conflicted self-dealing crooks?
    I’m shocked. Shocked. Who knew?
    The products they sell are purposely structured to be so complex, ambiguous, and opaque that they are beyond comprehension. They HAVE to be inscrutable. Who in their right mind would knowingly invest in a vehicle that totally screwed them? And, of course, when their quants come up with a beauty – it’s proprietary. They want to screw you without any competition.
    ZIRP has killed safe investments like treasuries. Everyone’s stretching for yield and vulnerable to a slick sales pitch.
    There ARE no safe investments today. Stick with index funds.

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