NY pension funds to invest in post-Sandy infrastructure projects

As a reaction to damages incurred by Superstorm Sandy – and a timely move, considering the big 12-12-12 fundraiser concert this week – New York City’s teacher pension fund has announced that it will invest $1 billion in infrastructure programs across the tri-state area.

According to Reuters, it’s the first time that the city’s nearly $128 billion in public pension funds will be put towards infrastructure projects, a move which drew the praise of former President Bill Clinton, who helped make the announcement.

“This is a remarkable commitment,” Clinton said Thursday. “It represents a very significant step forward … putting us on a path to a sustainable future for New York City.

It’s also a major move on the part of the embattled union movement, a follow-up on a promise made last year by the AFL-CIO suggesting that labor groups would help fund $10 billion in U.S. infrastructure projects over the next half decade.

Federal HUD Secretary Shaun Donovan also welcomed the investment, as an Obama administration request for $60.4 billion in emergency aid is currently being delayed by Republican requests to reduce the amount. The money would go toward infrastructure fixes to help prevent damage in any further future weather event on the vulnerable Eastern Seaboard.

Pension plans across the world more regularly invest in infrastructure projects, but that has not been the case so far in the United States. In this case, New York’s pension funds may also make equity investments or put money into housing, as well as buying bonds from project owners.

Investments made could be treated as fixed-income assets in the pension fund’s portfolio, earning a modest rate of return.

 

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