By Jill Colvin and Tom Liddy
DNAinfo Staff
CITY HALL — Mayor Michael Bloomberg and City Comptroller John Liu announced an "historic" agreement with the union leaders Thursday to overhaul the city's pension system in an attempt to maximize returns while tackling skyrocketing retirement costs.
"This is a game changer," said Liu, whose office spearheaded the deal, which is aimed at trying to boost the performance of pension investment funds so that they bring in more money, instead of the usual approach of trying to reign in soaring costs.
The plan, which the mayor stressed was merely an agreement "in principle" between city officials and labor leaders, would create a single, consolidated pension investment management board that would manage all five of the city's existing pension funds.
The funds, which total more than $100 billion, would still remain in five separate accounts, with separate boards charged with making disability decisions and administering benefits.
The central management board would be run by an independent, full-time staff and overseen by a new chief investment officer who would be paid on a level similar to private investment managers, Bloomberg said.
The plan also seeks so change the city's investment procurement regulations to protect against fraud and abuse.
Liu said that he hoped the overhaul would be able to boost investment returns by as much as 1 to 2 percent, which, given the size of the funds, could amount to well over $1 billion a year — freeing up funds for other things, like paying teacher salaries.
“This agreement really is a basic step toward potenatially historic pension reform," said the mayor, who repeatedly praised Liu in a rare showing of mutual respect by the men whose icy relationship is near-legendary.
Union leaders praised the deal, which they stressed is intended to streamline and depoliticize the investment process.
Today, makng an investment is "like trying to turn the Queen Mary around in the Hudson River. By the time you do it, you’ll be going in the wrong direction," said Steve Cassidy, president of the Uniformed Firefighters Association.
Others praised the administration for working with union leaders.
"It's a great idea," said United Federation of Teachers President Michael Mulgrew, who is frequently at odds with the mayor. "This works and it's smart."
But the deal, which would need to be approved by the state legislature as well as Governor Andrew Cuomo, is far from complete, despite the praise.
"The devil is in the details," said Pat Lynch, the head of the Patrolmen's Benevolent Association, the police officers' union.
Cuomo spokesman Josh Vlasto gave few hints about the Governor's thinking on the plan.
"We've been working diligently to reduce the cost of public pensions on the taxpayers. We look forward to reviewing the city's proposal when we receive it,” he said in statement.
The Mayor has riled feathers in the past by calling for comprehensive pension reform that would cut into retirement and health benefits.
