A new report scrutinizing the state pension fund’s reliance on Wall Street investment managers drew a stern rebuke from state Comptroller Thomas DiNapoli on Monday, who said the analysis was filled with “half truths” that “fail the test of credibility.”
The Independent Democratic Conference, a breakaway caucus of four Democrats in the state Senate, issued a report Monday that found that payments to outside investment managers increased by 163 percent from 2007 to 2011, from $162 million to $425 million.
During the same period of time, the annual rate of return on the pension fund averaged 2.6 percent, according to the report. The $140 billion pension fund, which is overseen by DiNapoli’s office, pays outside firms to manage portions of its investments.
“The report … reveals a great disparity to the fees we’ve paid and the performance we’re being provided,” said Sen. Jeff Klein, D-Bronx, a member of the conference. “Wall Street is making money off us when they should be making money for us.”
But in a statement issued after the report was unveiled, DiNapoli said the Independent Democrats didn’t compare apples to apples. Under reforms instituted since he took office in 2007, the annual pension fund reports disclose more fees as “management expenses,” making the spike seem higher than it actually is, according to DiNapoli.
“The IDC released a fundamentally flawed and misleading analysis that demonstrates a level of irresponsibility rarely seen in this capital,” DiNapoli said. “I find it shocking that these senators did not fully research this subject.”
DiNapoli’s rebuttal prompted a response from the caucus’ spokesman, who said the comptroller’s statement was “heavy on personal attacks and light on clarity.”
“Only in Albany can looking at something with a critical eye be considered irresponsible,” said Rich Azzopardi, the spokesman. “Our report posed questions as to why management investment fees increased during a time when pension fund investments sputtered and was based upon numbers regularly released by the Comptroller’s Office.”
Here’s the full IDC report: