OPINION: New ACCF report finds NYC public pension fund system in bad shape and getting worse
As city leaders use retirees’ pensions to advance political causes, taxpayers may be on the hook for $56 billion shortfall
On the heels of New York City’s push to divest its investments in fossil fuels, a new report finds politicized investment decisions are a recurring example of the city comptroller advancing social causes over financial results.
In Volume Two of its “Point of No Returns” series, the American Council for Capital Formation (ACCF) takes a closer look at how the five public-sector pension funds that collectively comprise the New York City Retirement Systems got in the shape they’re in today – and how taxpayers are ultimately the ones who will bail-out the program if it cannot meet its future obligations. The ACCF report also examines the role that politics continues to play in how fund beneficiaries’ money is being invested, and whether too much of the focus of fund managers, board members, and the city comptroller himself is on using pensioners’ money to advance political and social causes – actions that are done at the expense of maximizing returns and doing what’s necessary to improve the system’s underfunded status.
“Divestment is just one example of politics taking precedence over returns for New York City beneficiaries. Fund managers responsible for the pension-fund system of New York City routinely invest in things that have no reasonable expectation to yield acceptable returns for investors,” said Tim Doyle, ACCF’s executive vice president and general counsel, and author of the report. “We concur with previous reports on the role that poor management has played in growing the unfunded gap, as well as how the use of certain accounting tactics has allowed fund managers and the comptroller to shield from public view the true consequences of their mismanagement.”