The management fees paid by New York City's public pension funds surged 28 percent in the last fiscal year, according to the comptroller's annual report.
For the fiscal year that ended in June, the report said, the five funds that cover the retirement benefits for city employees and teachers paid $472.5 million in fees to private fund managers. That was $100 million more than the previous year. The funds assets rose by 12.1 percent to $137 billion at the end of the fiscal year. Last month, Liu said the assets had climbed to $144 billion.
Public pension funds across the country have come under increasing pressure as actuarial assumptions about return on investment have been lowered, widening the gap in future unfunded liabilities. New York City's liabilities were pegged at $77.3 billion in a Morningstar report this month. That was by the highest amount faced by any large U.S. city.
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Those huge unfunded liabilities have spurred New York City to invest more of its pension assets in hedge funds and other alternatives, which generate higher fees. New York City is one of the few cities that relies solely on private pension managers.
Scott Stringer, who was elected the city's comptroller in November, has said he wants to lower the fess and streamline management of the funds when he takes office in January.
New York City currently contributes about $8 billion annually to the pension funds. Liu's office has said that figure will rise slightly through fiscal 2017 before dropping. The expected decrease in contributions is because the funds' ROI has averaged 12.8 percent over the last four years, far above the benchmark 7 percent assumed for calculating their health.
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