America’s biggest city is not immune from pension woes. A study conducted in 2015 concludes that the retirement system serving New York City, which had assets of $162.9 billion as of June 30, 2015, needs a variety of additional resources.
The New York Times reports that the New York City Office of the Comptroller’s Bureau of Asset Management (BAM) commissioned Funston Advisory Services, LLC (FAS) to conduct a management and operations study and best practice review of the city’s pension system, which did so from June to October 2015.
The report credits BAM staff, as well as support from the comptroller, pension systems staff and investment consultants, with “heroic efforts” that succeeded in forestalling serious operational failures. Nonetheless, FAS also found that BAM needs more staff and resources. “Given the level of portfolio complexity and the demands of serving the five systems, BAM remains understaffed and under-resourced, notwithstanding staffing and compensation increases and office facilities improvements,” the report says.
FAS stresses the importance of cutting the number of investment committee meetings, which it says would allow executives more time to pursue strategic and operational improvements. If the pension system doesn’t do so, FAS says, it should increase BAM’s resources or simplify asset allocations to better allow current resources to support them. And even if BAM does hold fewer meetings, it still should add staff and modernize its systems, the report suggests.
Furthermore, says FAS, if BAM wants to be successful in transforming itself, it needs to develop new capabilities and redeploy existing resources. And it suggests that the governance of the system be reviewed as well.
FAS’ overall conclusion is that without additional resources, the current investment strategy the system is following “presents a very high level of operational risk.” That risk, FAS says, has been growing for a long time and requires “long-term solution, long-term leadership, the support of the systems and long-term resourcing.” It adds that immediate action also is necessary.
The New York Times reports that the New York City Office of the Comptroller’s Bureau of Asset Management (BAM) commissioned Funston Advisory Services, LLC (FAS) to conduct a management and operations study and best practice review of the city’s pension system, which did so from June to October 2015.
The report credits BAM staff, as well as support from the comptroller, pension systems staff and investment consultants, with “heroic efforts” that succeeded in forestalling serious operational failures. Nonetheless, FAS also found that BAM needs more staff and resources. “Given the level of portfolio complexity and the demands of serving the five systems, BAM remains understaffed and under-resourced, notwithstanding staffing and compensation increases and office facilities improvements,” the report says.
FAS stresses the importance of cutting the number of investment committee meetings, which it says would allow executives more time to pursue strategic and operational improvements. If the pension system doesn’t do so, FAS says, it should increase BAM’s resources or simplify asset allocations to better allow current resources to support them. And even if BAM does hold fewer meetings, it still should add staff and modernize its systems, the report suggests.
Furthermore, says FAS, if BAM wants to be successful in transforming itself, it needs to develop new capabilities and redeploy existing resources. And it suggests that the governance of the system be reviewed as well.
FAS’ overall conclusion is that without additional resources, the current investment strategy the system is following “presents a very high level of operational risk.” That risk, FAS says, has been growing for a long time and requires “long-term solution, long-term leadership, the support of the systems and long-term resourcing.” It adds that immediate action also is necessary.
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