Friday, October 14, 2011

Out of Control Investment Fees

Every June the NYCERS actuary presents to the trustees his estimate of what the pension costs will be for the next year. The total bill for FY-2012 is $2.587B. The city's share of that cost is $1.403B. The rest is charged to other participating employers.

As part of the $2.587B amount, there are two non-benefit items. They are investment expenses and administrative expenses. The charge for investment expenses is $204M and for administrative expenses, it is $55M.

The $204M figure grabbed my attention when I saw it. I have previously complained about obscene growth in investment fees but there is a real kick to the actuary's $204M charge.

I have listed below the investment fee charges since 2000. I can not believe that the trustees think these increases are rationale.

  1. $27.2 (2000)
  2. $38.5 (2001)
  3. $40.0 (2002)
  4. $40.6 (2003)
  5. $31.6 (2004)
  6. $46.4 (2005)
  7. $00.0 (2006)
  8. $53.8 (2007)
  9. $80.9 (2008)
  10. $114.5 (2009)
  11. $134.5 (2010)
  12. $161.1 (2011)
  13. $204.4 (2012)

In 2006, the city had the law changed so that expenses were paid two years after the fact rather than one year, thus producing a payment holiday.

On a smaller scale administrative expenses have gone up 40% since 2005, from $35.3M to $55.1M. Does anyone think that service at NYCERS has increased 40% over that time period. It sure wasn't the completion of the disaster recovery site.

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