Union defends sole trustee for pension fund

By SHERRY HALBROOK
PEF has entered the debate over whether the state comptroller should remain the sole trustee of the state pension funds, or if he should be replaced with a board of several trustees. The union continues to staunchly support the comptroller as sole trustee.

“New York’s pension fund investments consistently outperform those made by funds overseen by multiple trustees, and it would be foolhardy to try to imitate those with inferior performance,” PEF President Ken Brynien said. “What’s more, such a change is no guarantee against corruption or abuse by fund managers.

“I continue to be disappointed when people or groups, that generally I respect, come out in favor of a board of trustees for the New York State Employees’ Retirement System (ERS),” Brynien wrote in a January letter to The NY Times, which had editorialized in favor of the change. “In your December 24, 2009, editorial you failed to take a closer look at what is behind the curtain.”

Proponents of creating a board of trustees claim sole trustees are ripe for abuse, and cite issues surrounding fund administration under former NYS Comptroller Alan Hevesi.

However, the California public pension system (CalPERS), which is managed by a board of trustees, is also investigating fees paid to external investment managers.

“Corruption is not a problem that is solved by a board of trustees. This is a problem solved by reforms such as those made by NYS Comptroller Thomas DiNapoli,” Brynien said.

Citing the financial performance of New York state’s ERS in comparison to state pension funds run by boards of trustees, Brynien said the rate of return for New York’s fund has been higher over the past 10 years than those of the New York City Employees’ Retirement System and CalPERS.

“If our ERS had the rates of returns those two funds had last year, New York’s deficit would be $8 billion deeper,” Brynien said. “Our pension fund outperformed them for one-, three-, five- and ten-year rates of return.

“New York does not need a board of trustees. We need more transparency and oversight of external investment managers. We need to know who is responsible if things go wrong, so we can remove that person and fix the problem.