Res. No. 502
Resolution Calling on the New York State Legislature to introduce and pass, and the Governor to sign, legislation which authorizes the City of New York to explore and implement pension reforms that reduce costs, maximize return on investment and preserve vested pension rights for retirees and employees
By Council Member Morano
Whereas, New York City (“NYC” or “City”) has five public pension funds established by the New York State (“NYS” or “State”) Retirement and Social Security Law and State Education Law; and
Whereas, The Comptroller is the legal custodian of the five pension funds, but each fund has its own Board of Trustees, which, in collaboration with the Comptroller, makes investment decisions for the fund, and
Whereas, the funds invest in a variety of assets and have an annual target rate of return of 7%, which when met ensures they can meet their fiduciary obligations to employees and retirees, and if exceeded, reduce the City’s direct costs; and
Whereas, City pension contributions total about $10 billion annually, making up just under 10% of the City’s budget, and have steadily increased over the last twenty years; and
Whereas, Each year, according to Crain’s New York, investment management fees for the five funds cost $1.5 billion, and millions of dollars more in overhead expenses are spent on administration and office space; and
Whereas, There have been several proposals to reform the City’s pension system by consolidating the funds and looking to shared investment management and strategies to cut costs and create better investment opportunities, such as a 2011 proposal from then Mayor Bloomberg to consolidate the City’s funds so that they shared a single board and in-house investment management system; and
Whereas, In 2018, the Independent Budget Office (IBO) released a report that estimated potential savings of over $20 million by consolidating the funds; and
Whereas, Further, a 2020 Manhattan Institute report found that, in addition to the cost savings estimated by the 2018 IBO report, consolidated asset management could reduce debt overhang in underfunded systems, reducing the incentive to pursue risky investment strategies; and
Whereas, Other jurisdictions have reformed their pension systems to create similar efficiencies, including the state of Illinois, which consolidated over 297 local fire pension funds and 357 local police pension funds into two plans, resulting in savings of over $127 million in operating costs, a reduction in fees by 72%, and an increase in pension funding by 11%; and
Whereas, The Fiscal Year 2027 Executive budget proposes fund re-amortization to close the budget gap, which some researchers have suggested could add another $5 billion to the City’s pension liability; and
Whereas, The Comptroller has also announced a plan to direct $4 billion in pension assets to affordable housing development, which does not have a certain return on investment; and
Whereas, The anticipated increased annual pension cost due to inflation, rising healthcare costs, and enhanced benefits for some employees which limit employee contributions, paired with possible financial difficulties due to potentially risky strategies could result in the underfunding of City pensions, putting retiree vested pension rights at risk; and
Whereas, Pension reforms that cut down on overhead and administrative fees and create better investment opportunities, such as consolidation, shared investment management structures, and more modern and efficient governance and administrative functions, could help ensure that City pensions meet and exceed their investment targets and potentially save the City millions of dollars in administrative costs; now, therefore, be it
Resolved, That the Council of the City of New York calls on the New York State Legislature to introduce and pass, and the Governor to sign, legislation which authorizes the City of New York to explore and implement pension reforms that reduce costs, maximize return on investment and preserve vested pension rights for retirees and employees.
PR
LSR #24601
6/5/2026 10:54 AM