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Mayor, Officials Unveil Plan for City Pension Overhaul

Thursday, October 27, 2011

Mayor  Michael Bloomberg, city Comptroller John Liu and labor leaders said Thursday that they've developed a plan to potentially make New York City a national leader in the way public pensions are governed.

Currently, five separate boards oversee each of the city's five funds, which serve retired teachers, police officers, firefighters and other city employees. Under the proposed plan, a single board — with representatives from the mayor, the comptroller and labor — would oversee the management of all funds.

"By consolidating pension investment management in this way, we'll reduce consultant costs and transaction fees and pension assets will be invested more efficiently than they are currently," Bloomberg said.

The new board would hire an independent chief investment officer to manage the funds' assets. The officer would be appointed for a fixed term and would be paid a salary consistent with the private sector.

Comptroller John Liu calls the plan "a game-changer."

"This kind of governance change can improve investment results by 1 to 2 percent," Liu said. "That is over a $1 billion a year on a fund that exceeds $100 billion."

Liu also said the proposal will take the politics out of pension management by moving the Bureau of Asset Management, now part the comptroller's office, under the authority of the independent investment board. He said the plan builds off of successful pension models in other parts of the country and Canada.

Bloomberg and Liu said they and union leaders have developed the plan in principle, and details still need to be worked out. The plan would need the approval of legislators in Albany.

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