New York City’s pension funds lost 8.65% of their value for the fiscal year that ended June 30, according to a release Friday from city Comptroller Brad Lander.
While more detailed information won’t be released until September, the losses reduced the pension funds to about $240 billion.
While the S&P 500 stock index fell 14% in the first six months of 2022, Lander said that all is well with the pension funds “Despite market declines on a scale that hasn’t been seen in decades, the New York City retirement system outperformed our benchmarks and are well positioned to weather market volatility in the long run,” he said in a statement.
But the city budget — currently $101 billion — will still take a hit.
New York City Comptroller Brad Lander and trustees of the New York City Retirement Systems announced that investments in climate solutions have now reached more than $7 billion across all systems and asset classes as of the end of 2021, well exceeding the $4 billion goal set by three of the funds in 2018. These investments in companies that are helping to facilitate a just transition to a low carbon economy build on the $4 billion divestment by three of the five funds from companies that own fossil fuel reserves, which is expected to be completed later this year.
This milestone surpasses the goals set by the New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System (TRS), and Board of Education Retirement System (BERS), in 2018 to double their investments in climate solutions from $2 billion to $4 billion by 2022. In October 2021, the three Systems adopted a goal to achieve net zero greenhouse gas emissions by 2040. As part of this commitment, the three Systems set a goal to reach a total of $37 billion in climate solutions investments by 2035, in line with a total of $50 billion across all five Systems by 2035.
The climate solutions in the New York City Retirement Systems’ portfolio includes investments in companies that derive a majority of their revenue from climate mitigation, adaptation, and resilience activities, such as renewable energy, energy efficiency, pollution prevention, and low-carbon buildings. Climate solutions investments in the Systems’ portfolios have grown consistently and greatly in the last several years, more than doubling in value since 2018.
New York City’s comptroller is the latest public official trying to change laws aimed at limiting risk in pension investments, as U.S. state and local pension funds try to plug shortfalls in a low-return environment.
Comptroller Brad Lander, who oversees about $260 billion in retirement money for city police, firefighters, teachers and other public workers, is asking New York lawmakers for more flexibility to invest in private markets, high-yield debt and foreign stocks. The state comptroller’s office, which supervises another $280 billion in retirement assets, views the idea favorably, with a representative saying such flexibility “is key in times of market volatility.”
Pension funds, like household investors, are facing a relatively bleak environment for stocks and bonds, the bread and butter of a traditional retirement portfolio. In the face of historic inflation and Federal Reserve efforts to contain it, these funds are finding they can no longer rely on bonds to rise when equities fall and vice versa. In the first quarter, the S&P 500 returned minus 4.6% while the Bloomberg U.S. Aggregate bond index returned minus 5.93%.
“Those two things taken together is what’s scary: the prospect of both going down at the same time,” said Steve Foresti, chief investment officer at Wilshire Associates, which advises large public pension funds. Retirement portfolio managers, he said, are asking “in that environment, do I have anything that actually goes up?”
New York employees and taxpayers are unwittingly financing Russian companies and the oligarch pals of Vladimir Putin with at least $519 million invested in assets now frozen by the war-mongering dictator, The Post has learned.
City and state pension systems have pledged to sell off the holdings in protest of Russia’s assault on Ukraine, but Moscow has prohibited foreign investors from dumping the stocks.
“Putin is a thug and he’s holding our money hostage,” said Gregory Floyd, a Teamsters union leader and trustee of the New York City Employee Retirement System, NYCERS.
New York City’s five pension systems – covering teachers, cops, firefighters and other city employees – have invested a total $284.5 million in 33 publicly traded Russian stocks, according to records released to The Post by city Comptroller Brad Lander’s office.
On Feb. 25, the market value of the Russian assets was $185.9 million, nearly $100 million less than the purchase price, the latest available records show.
The New York City Comptroller is an investment advisor and fiduciary for New York City’s $266 billion public pension system that serves 700,000 current and former teachers, firefighters, health care workers, police officers, and other retired city employees.
Brad Lander, the Democratic nominee for Comptroller, is all but certain to win the general election this fall in the overwhelmingly Democratic city after prevailing in a competitive primary earlier this year. If successful, Lander would be inaugurated in January and soon be able to make recommendations to the Boards of Trustees of the city’s five public pension funds on how their many billions should be invested, while also voting directly on four of the five pension boards, making him the key figure in almost all investment decisions.
The implications are significant given that city workers’ pensions are on the line, and because the city guarantees those pensions, billions are spent each year to make up for what the pensions themselves don’t produce in returns. Better returns from pension fund investments can save city government a significant amount of money that could be used for other priorities or put aside for a crisis.
Those investment decisions can also be made to further other goals than simply the funds’ bottom lines, though the returns and overall financial health of the pension funds are the comptroller’s main city charter-mandated responsibility.