New York's top financial regulator said Tuesday he plans to audit the state and city pension funds, with the goal of introducing regulations to increase accountability and transparency of the massive investment holdings.
Benjamin Lawsky, superintendent of the state Department of Financial Services and Gov. Andrew Cuomo's top financial watchdog, said at a Crain's New York Business breakfast forum that his office began reviewing city pension funds this week and will soon release its initial findings of its yearlong study of the state pension fund.
“These are huge funds, and taxpayers and retirees deserve strong oversight,” Mr. Lawsky said.
The relationship has been icy, and at times antagonistic, between the Cuomo administration and state Comptroller Thomas DiNapoli, the sole trustee of the $160.4 billion New York State Common Retirement Fund. When Mr. Cuomo was attorney general (and Mr. Lawsky his special assistant), he investigated Mr. DiNapoli for pension fund abuses, eventually clearing him in October 2010, one month before Mr. DiNapoli's election. Mr. Cuomo did not endorse Mr. DiNapoli, a fellow Democrat, in his race.
Mr. Lawsky said his office was collaborating with Mr. DiNapoli on the review of the state pension fund, which the comptroller has repeatedly characterized as sound and well managed, citing some outside reviews as evidence. But others have called into question the risks the fund has taken to achieve higher returns.
Because the analysis of the $137 billion New York City Retirement Systems has just begun, Mr. Lawsky could not say how city Comptroller John Liu had responded to it. Mr. Liu is the primary overseer of the city pension funds and is currently a candidate for mayor.
During his speech, Mr. Lawsky evoked the recent bankruptcy of Detroit to underscore the necessity of his audit of the pension funds. His office will examine policies and procedures of the funds such as fiduciary issues, risk management, benefit calculations, information technology and member treatment.
“We may propose new regulations to increase accountability and transparency at those funds,” he said.
" State to probe pension funds" originally appeared on Crain's New York Business' website, a sister publication of Pensions & Investments.