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New York City Pension Funds

Parent Entity:

New York City
Responsible Office:

Office of the Comptroller of New York City
Responsible Officer:

Comptroller Scott Stringer (D)

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The New York City Public Pension Funds refer collectively to five New York City public-employee pension funds that hold over $253 billion in combined assets.1 Managed by the New York City Comptroller (as of 2021, Democrat Scott Stringer), the Funds are one of the largest sponsors of the left-of-center environmental, social, and corporate governance (ESG) movement, frequently using their asset power to enact left-of-center shareholder resolutions at major companies. 2

Most of the New York City Public Pension Funds’ work has centered around promoting environmentalism and a left-of-center approach to diversity management. The Funds have pledged to invest $4 billion into environmentalist energy projects by 2021 and have sought advice on how to entirely divest from the conventional energy industry.3 The Funds have also supported shareholder proposals that would mandate that companies disclose the gender and racial makeup of their workforces and require companies to consider women and ethnic minorities in all senior executive hiring decisions.4 5

As of May 2021, the Funds are directed by New York City Comptroller Scott Stringer, a longtime Democratic politician who is running for mayor of New York City. Comptroller Stringer received early support from left-wing officials and organizations, including the Working Families Party (WFP), but lost support in April 2021 after a former campaign volunteer accused him of sexual assault. 6

Background

The New York City Public Pension Funds include five separate funds for public employees, New York City teachers and education employees, police officers, and firefighters. The Funds include the New York City Employees’ Retirement System (NYCERS), the New York City Board of Education Retirement System (BERS), the New York City Fire Department Pension Fund, the New York City Police Pension Fund (NYCPPF), and the New York City Teachers’ Retirement System (TRS). 7

Each fund has its own board of trustees that works with the New York City Comptroller’s Office Bureau of Asset Management and the New York City Office of the Actuary. While each of the five pension funds are financially independent of one another, they often engage in similar initiatives and push a concerted ESG agenda. 8

The New York City Public Pension Funds have a combined estimated value of $253.38 billion as of March 2021.9 In 2020, the Fund lost over $15 billion, and pension liabilities climbed 567% from 2002 to 2017 according to a 2018 study. The same study found that the state was on track to spend more on pension costs than social services.10 In 2019, the Funds continued to fall in the red, reporting a combined net liability of $43 billion.11

New York City taxpayers’ contribution to the pension funds increased from $1.4 billion in fiscal year 2002 to $9.3 billion by fiscal year 2017.12 By 2019, taxpayers contributed $9.8 billion to the Pension Funds.13 There has been consistent criticism of the size and increasing deficit of the Pension Funds, with pension contributions making up 11% of the total New York City budget and 36% of all payroll costs in 2017.14

Shareholder Activism

The New York City Public Pension Funds have adopted a broad left-of-center shareholder activism agenda in recent years, particularly pertaining to environmentalist issues. The New York City Comptroller’s Office and Comptroller Stringer submitted 92 different shareholder resolutions to 88 different companies during fiscal year 2017, nearly double the number it submitted on behalf of the Funds in 2014.15 The New York City Employees’ Retirement Sysetm, one of the Funds, is one of the 10 biggest sponsors of left-of-center ESG resolutions in the United States, though most of its proposals have never gained majority support.16

Aside from supporting specific left-of-center proposals, the New York City Public Pension Funds have used their influence to replace corporate board members with their preferred choices. In 2013, the Funds joined with the California State Teachers’ Retirement System (CalSTRS) to replace three board members at Hewlett-Packard.17

Private Prisons

The New York City Comptroller’s Office has used the Pension Funds to support left-of-center causes, including divesting the Funds from the private prison industry. In 2019, the Comptroller’s Office further divested from all companies that provided services for private prisons. 18

Environmentalism

Since 2017, the Pension Funds have been committed to fully divesting from the conventional energy industry within the next 5 years, instead investing in environmentalist energy projects.19

In April 2018, three of the five New York City Public Pension Funds put out a request for information on how to best create a strategy to entirely divest from conventional energy companies.20 Five months later,  Comptroller Stringer and New York Mayor Bill de Blasio (D) announced that the city’s pension funds would double their investments in environmentalist energy to $4 billion by 2021. Comptroller Stringer portrayed the move as doubling New York City’s “holdings in climate solutions.”21

This selection of ESG-motivated, “alternative investments” has led to higher management fees for the five New York City Public Pension Funds. From 2014 through 2017, the Teachers’ Retirement Fund faced an 81.6% increase in management fees because of its selection of investments. 22

Diversity Programs

In October 2019, New York City Public Pension Funds formally asked companies in which they held shares to establish policies to include more women and ethnic minorities on their corporate boards. Comptroller Stringer sent letters to 56 major corporations that he said lack a rule on women and minority hiring, regardless of the existing diversity on the board. These companies included Berkshire Hathaway, AT&T, Delta Air Lines, Ford Motor Company, Verizon Communications, Walmart, Walt Disney, and Boeing. 23

In December 2020, NYC Comptroller Stringer and New York State Comptroller Thomas DiNapoli (D) issued shareholder proposals on behalf of state and city retirement systems targeting companies that they did not believe had gone far enough to encourage diversity. On behalf of three of the NYC Public Pension Funds, Comptroller Stringer filed resolutions at American Airlines, Dell, Kroger, and TJX calling on each of the companies to adopt a policy which would require them to consider women and ethnic minorities when hiring senior executives.24 That same year, Comptroller Stringer had filed a request asking 67 of the S&P 100 companies that had issued statements in support of racial equality to disclose their diversity and inclusion statistics.25

In May 2021, the New York City Public Pension Funds succeeded in passing shareholder resolutions at Dupont and Union Pacific. The proposals forced both companies to publicly disclose the makeup of their labor forces by gender, race, and ethnicity. The Funds filed similar resolutions at other major companies, including American Express and Procter & Gamble, but they had not been voted on as of May 24, 2021.26

Fund Administration

New York City Comptroller Scott Stringer acts as an investment advisor to the Funds and is responsible for proxy voting on the Funds’ behalf, designing strategy, and implementing shareowner initiatives.27 Comptroller Stringer previously sat in the New York State Assembly for 12 years as a Democrat before becoming borough president in Manhattan. Since 2013, Comptroller Stringer has sat in his current position.28

In September 2020, Comptroller Stringer announced his candidacy for New York City mayor, instantly gaining support from far-left political officials including New York State Senators Jessica Ramos (D-Jackson Heights) and Alessandra Biaggi (D-Bronx). Comptroller Stringer has supported a left-progressive agenda, including requiring that every new large residential project in the city earmark at least a quarter of its units for low-income housing, defunding the New York City Police Department, and increasing wealth taxes. At the beginning of his campaign, Comptroller Stringer was the most well-funded candidate in the race, with $2.3 million.29

In April 2021, Comptroller Stringer lost most of his major supporters following allegations that he had sexually assaulted a campaign volunteer during his time as a New York representative. The left-wing Working Families Party withdrew its endorsement of Comptroller Springer, grouping him with the “culture of sexual harassment” in New York politics. Far-left New York State Senators Biaggi, Gustavo Rivera (D-West Bronx), and Julia Salazar (D-Bushwick) also withdrew their endorsements.30

Alex Done is the chief investment officer of the New York City Public Pension Funds and the Deputy Comptroller of the New York Bureau of Asset Management (BAM). Done has worked at the Comptroller’s Office since 2012. Prior to joining the Comptroller’s Office, Done worked as a presidential appointee at the U.S. Department of Commerce Minority Business Development Agency during the Obama administration.31

Michael Haddad is the deputy CIO of public and tradable securities. Haddad previously worked in asset management at Morgan Stanley and Caxton Associates before taking on a senior portfolio management position at Soros Fund Management, the advisory firm for the Quantum Group of Funds founded by billionaire liberal donor George Soros.32

References

  1. “Pension / Investment Management.” comptroller.nyc.gov. New York City Comptroller. Accessed May 26, 2021. https://comptroller.nyc.gov/services/financial-matters/pension/asset-allocation/.
  2. Press Release. “Bad Apple: New ACCF Report Finds New York City’s Public Pension Fund System in Bad Shape and Getting Worse.” January 11, 2018. Accessed December 12, 2019. https://accfcorpgov.org/wp-content/uploads/NYC-Report_Press-Release_01.10.18_FINAL-1.pdf
  3. Butera, Chris. “NYC Pension Funds to Double Green Investments.” Chief Investment Officer.

    September 17, 2018. Accessed December 12, 2019. https://www.ai-cio.com/news/nyc-pension-funds-double-green-investments/

  4. Comtois, James. “N.Y. Comptrollers’ Proposals Target Amazon, 4 Others.” Pensions & Investments. Crain Communications, December 21, 2020. https://www.pionline.com/governance/ny-comptrollers-proposals-target-amazon-4-others.
  5. Min, Sarah. “Diversity Demands from NYC Pension Overseer OK’d at DuPont, Union Pacific.” Chief Investment Officer, May 13, 2021. https://www.ai-cio.com/news/diversity-demands-from-nyc-pension-overseer-okd-at-dupont-union-pacific/.
  6. Goldenberg, Sally. “Stringer’s Support Crumbles as Assault Allegations Scramble New York Mayor’s Race.” Politico, May 2, 2021. https://www.politico.com/states/new-york/city-hall/story/2021/04/30/stringers-support-crumbles-as-assault-allegations-scramble-new-york-mayors-race-1379544.
  7. Penson/Investment Management. Accessed December 12, 2019. mhttps://comptroller.nyc.gov/services/financial-matters/pension/faqs/
  8. Penson/Investment Management. Accessed December 12, 2019. https://comptroller.nyc.gov/services/financial-matters/pension/faqs/
  9. “Pension / Investment Management.” comptroller.nyc.gov. New York City Comptroller. Accessed May 26, 2021. https://comptroller.nyc.gov/services/financial-matters/pension/asset-allocation/.
  10. Press Release. “Bad Apple: New ACCF Report Finds New York City’s Public Pension Fund System in Bad Shape and Getting Worse.” January 11, 2018. Accessed December 12, 2019. https://accfcorpgov.org/wp-content/uploads/NYC-Report_Press-Release_01.10.18_FINAL-1.pdf
  11. McMahon, E.J. “NYC Pension Funds’ Return Was a Subpar 4.4% in FY 2020.” Empire Center for Public Policy, August 11, 2020. https://www.empirecenter.org/publications/nyc-pension-funds-return-was-subpar/.
  12. Study. “Point of No Return.” New York City Pension Funds. Accessed December 12, 2019. ,https://accfcorpgov.org/new-york-city-pension-funds/
  13. Riedl, Brian, Jason L. Riley, Steven Malanga, and Michael Hendrix. “Reforming New York City’s Public Retirement System.” Manhattan Institute, October 15, 2020. https://www.manhattan-institute.org/reforming-new-york-city-public-retirement-system.
  14. Riedl, Brian, Jason L. Riley, Steven Malanga, and Michael Hendrix. “Reforming New York City’s Public Retirement System.” Manhattan Institute, October 15, 2020. https://www.manhattan-institute.org/reforming-new-york-city-public-retirement-system.
  15. Study. “Point of No Return.” New York City Pension Funds. Accessed December 12, 2019. https://accfcorpgov.org/new-york-city-pension-funds/
  16. Press Release. “Bad Apple: New ACCF Report Finds New York City’s Public Pension Fund System in Bad Shape and Getting Worse.” January 11, 2018. Accessed December 12, 2019. https://accfcorpgov.org/wp-content/uploads/NYC-Report_Press-Release_01.10.18_FINAL-1.pdf
  17. Smith, Randall. “Some Big Public Pension Funds Are Behaving Like Activist Investors.” The New York Times. The New York Times, November 29, 2013. https://dealbook.nytimes.com/2013/11/28/some-big-public-pension-funds-are-behaving-like-activist-investors/.
  18. Scigliuzzo, Davide. “NYC Pension to Expand Prison Investment Ban Withy Platinum Equity.” Bloomberg News. June 18, 2019. Accessed December 12, 2019. https://www.bloomberg.com/news/articles/2019-06-18/nyc-pensions-to-expand-prison-investment-ban-with-platinum
  19. Butera, Chris. “NYC Pension Funds to Double Green Investments.” Chief Investment Officer. September 17, 2018. Accessed December 12, 2019. https://www.ai-cio.com/news/nyc-pension-funds-double-green-investments/
  20. Katz, Michael. “NYC Pensions Seek Divestment Plan Guidance.” Chief Investment Officer, April 13, 2018. https://www.ai-cio.com/news/nyc-pensions-seek-divestment-plan-guidance/.
  21. Butera, Chris. “NYC Pension Funds to Double Green Investments.” Chief Investment Officer. September 17, 2018. Accessed December 12, 2019. https://www.ai-cio.com/news/nyc-pension-funds-double-green-investments/  
  22. Study. “Point of No Return.” New York City Pension Funds. Accessed December 12, 2019.

    https://accfcorpgov.org/new-york-city-pension-funds/

  23. Steyer, Robert. “NYC Pension System Asks Companies to Adopt ‘Rooney Rule.’” Pensions & Investments. October 11, 2019. Accessed December 12, 2019. https://www.pionline.com/governance/nyc-pension-system-asks-companies-adopt-rooney-rule
  24. Comtois, James. “N.Y. Comptrollers’ Proposals Target Amazon, 4 Others.” Pensions & Investments. Crain Communications, December 21, 2020. https://www.pionline.com/governance/ny-comptrollers-proposals-target-amazon-4-others.
  25. Gerber, Marc S. “Preparing for the Shareholder Proposal Season: Insights.” Skadden, Arps, Slate, Meagher & Flom LLP, December 1, 2020. https://www.skadden.com/insights/publications/2020/12/takeaway-preparing-for-the-shareholder-proposal.
  26. Min, Sarah. “Diversity Demands from NYC Pension Overseer OK’d at DuPont, Union Pacific.” Chief Investment Officer, May 13, 2021. https://www.ai-cio.com/news/diversity-demands-from-nyc-pension-overseer-okd-at-dupont-union-pacific/.
  27. “Shareowner Initiatives Postseason Report.” comptroller.nyc.gov. New York City Comptroller. Accessed May 26, 2021. https://comptroller.nyc.gov/reports/shareowner-initiatives-postseason-report/.
  28. Khurshid, Samar, and Ben Max. “Scott Stringer’s Strengths and Weaknesses as He Runs for Mayor.” Gotham Gazette. Citizens Union Foundation, September 13, 2020. https://www.gothamgazette.com/city/9744-scott-stringer-strengths-and-weaknesses-runs-new-york-city-mayor-2021.
  29. Anuta, Joe, and Sally Goldenberg. “Comptroller Scott Stringer Officially Jumps in to New York City Mayor’s Race.” Politico, September 8, 2020. https://www.politico.com/states/new-york/city-hall/story/2020/09/08/comptroller-scott-stringer-officially-jumps-in-to-new-york-city-mayors-race-1315927.
  30. Goldenberg, Sally. “Stringer’s Support Crumbles as Assault Allegations Scramble New York Mayor’s Race.” Politico, May 2, 2021. https://www.politico.com/states/new-york/city-hall/story/2021/04/30/stringers-support-crumbles-as-assault-allegations-scramble-new-york-mayors-race-1379544.
  31. “Comptroller Stringer Appoints Alex Doñé as New Chief Investment Officer of the Bureau of Asset Management.” comptroller.nyc.gov. New York City Comptroller, December 10, 2018. https://comptroller.nyc.gov/newsroom/comptroller-stringer-appoints-alex-done-as-new-chief-investment-officer-of-the-bureau-of-asset-management-2/.
  32. “Comptroller Scott M. Stringer Announces New Appointments To Leadership Positions At Bureau Of Asset Management.” comptroller.nyc.gov. New York City Comptroller, January 11, 2016. https://comptroller.nyc.gov/newsroom/comptroller-scott-m-stringer-announces-new-appointments-to-leadership-positions-at-bureau-of-asset-management/.
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