Pension Funds are not primarily for Pensioners, they benefit fund managers up to 10X more.
(Image by Hilltop Finance) Details DMCA
More and more I've come to the inescapable conclusion that the pension funds are at the root of state and city fiscal problems.
This Bloomberg article confirms that the New York City pension fund is ~$250b (the New York State pension fund is only slightly larger). It fluctuates annually, and when it goes down, the city has to contribute billions more, often while stressed by diminished tax revenues from a recession itself.
The article shows that since 2018, the cost of running the NYC pension funds - 5 of them - has gone up by 40% in aggregate.
Former mayor Bloomberg and his Comptroller claimed a billion dollars could be saved by consolidating them, but the unions prevented that because as the article says the unions like "something they can control."
But this is not even the real issue. The real issue is why something that makes 0%-5% net after fees and excluding contributions - which could simply go towards pensioners instead of expensive managers, upgraded computer systems (see article), etc, at an over-CPI rate of inflation - is being kept at all.
Paying pensioners directly, including an annual COLA, and paid for with a combination of employer contributions and new taxes, would be more than offset by:
- Lower borrowing costs from lower borrowing AND better borrower ratings from having less debt
- Lower expenses after paying off some or most of existing debt over the next 10-20 years
- Improved infrastructure, housing opportunities (NYCHA needs $40b, which could be mostly paid for by the city after cashing in the pension funds), etc.
- A Public Bank (!) to loan to the People at competitive rates, or, in many cases, to credit-worthy people unable to get loans at all currently.
Taxes overall could probably be cut over time, as the debt gets paid off.
Who would lose out?
- Wall Street: both the stock market/brokers and the fund managers collecting fees
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
1
1
1
