This will reduce required City contributions by ~$550M over the next five years, leaving more funds available to meet current obligations.
** New York by the Numbers
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** Monthly Economic and Fiscal Outlook
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Photo Credit: Andrea Izzotti/Shutterstock
READ MORE ([link removed])
** No. 80 - August 8th, 2023
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** A Message from the Comptroller
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Dear New Yorkers,
One of the most important duties of the New York City Comptroller is to steward the pension fund investments that represent the retirement security of over 750,000 current and retired teachers, firefighters, police officers, social workers, crossing guards, secretaries, and other public sector workers.
These investments are how we meet our obligations to the people who’ve taught our kids, kept us safe, and taken care of our parks and streets and families. And they’re part of a social compact between generations that supports a robust public realm as a key to building our future. When these investments earn strong returns, it means the City then needs to deposit less money into the funds, leaving more to spend on affordable housing, child care, education, and other critical needs we face.
That’s why I’m pleased to report that for the fiscal year that ended June 30, 2023, NYC’s pension funds saw returns of 8.0%, exceeding our 7% target rate. While returns can fluctuate sharply from year to year and are often subject to the whims of the market – FY21 was one of the best years ever for the stock market, FY22 one of the worst – our longer-term trends are strong, with a 7.9% annualized rate-of-return over the past 7 years. Our Spotlight this month goes into detail on the FY23 returns and the pension funds’ asset mix across public and private markets (where we’ve worked hard to increase transparency in recent years).
Our funds’ strong long-term economic performance provides validation of our approach to responsible fiduciary investing, which takes into account the environmental, social, and governance (sometimes called “ESG”) risks facing our portfolio. Some right-wing politicians are now waging a “war on ESG” at the behest of their fossil fuel donors, the latest in their string of phony-populist culture wars. But taking risks like climate change (have you noticed it’s the hottest summer in human history?), inequality, or insider trading into account is not only consistent with fiduciary duty: it’s just plain common sense.
Sometimes those risks can be addressed at the level of an individual company; that’s why I called out BlackRock for appointing the head of Saudi Aramco, the world’s largest oil and gas company, to their board last month. But many of the risks we face are systemic – so they can’t be “due-diligenced” or diversified away. That’s why we’re proud that the Teachers, NYCERS, and BERS funds have adopted Net Zero Implementation Plans which are the boldest of any large U.S. public pension fund. Those plans set a framework through which we expect all of our asset managers and portfolio companies to set science-based targets for decarbonization that are consistent with preserving the value of our investments (and the planet that every one of them is located on).
During this spring’s proxy season, we also focused on workers’ freedom of association to organize a union and bargain collectively. We won a resounding win at Starbucks, where 52% of investors voted in favor of our resolution, calling for the company to conduct an independent, third-party assessment of their labor practices. We believe that respecting workers’ rights to organize, and taking a broader “good jobs” approach, is key to the long-term flourishing of the companies we invest in – and of the economy as a whole.
Speaking of the economy as a whole, both the national and local numbers are pretty strong this month, as you can read below. And we’ll have a lot more about New York City fiscal trends in our report on the City’s adopted budget, due out August 11th.
So hopefully you can take an end-of-summer vacation, and breathe a little easier, while we keep watching the numbers.
Sincerely,
Brad Lander
** Table of Contents
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** The U.S. Economy ([link removed])
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** New York City Economy ([link removed])
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** New York City Real Estate ([link removed])
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** Homelessness and Asylum Seekers ([link removed])
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** City Finances ([link removed])
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Read the Full August Economic Newsletter ([link removed])
** Spotlight:
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** New York City Pension Fund Returns for FY 2023
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For the fiscal year ending June 30, 2023, the five New York City public pension systems achieved a positive 8.0% net return, surpassing the 7% target rate set by the state legislature. As a result, the City’s required contributions to the pension system will be reduced by approximately $550 million over the next five fiscal years, leaving more funds to meet current obligations.
This month’s Spotlight dives into the economic and market conditions underlying these returns, as well as the approaches taken to strategic asset allocation and responsible fiduciary investing in pursuit of strong long-term risk-adjusted returns.
Read the Spotlight ([link removed])
Read the Full August Economic Newsletter ([link removed])
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