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New York City’s pensions gain 3.15%, falling short of targets

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(Bloomberg) — New York City’s five pensions posted their weakest investment performance in three years, weighed down by losses in international stocks and weak bonds returns.

The city’s pensions for police officers, fire fighters, teachers, civil employees and school administrators gained 3.15 percent for the 12 months ended June 30, after accounting for fees, Comptroller Scott Stringer said. It was the weakest gain for the $163 billion funds since a 1.37 percent return in 2012 and fell short of the funds’ 7 percent target.

“The New York City Pension Funds performed well in a difficult investing environment, but we are always focused on investing for the long term,” Stringer said in a statement. “We remain confident that our mix of assets is well-positioned to take advantage of market opportunities in the coming years.”

Stringer, a Democrat, serves as the funds’ investment adviser, custodian and as a trustee. New York is reporting pension returns after fees across all assets for the first time, Stringer said. The pensions returned 3.4 percent before taking fees into account.

Targeted Returns

State and local pensions count on returns of 7 percent to 8.5 percent to pay retirement benefits for teachers, police officers and other civil employees. When pensions don’t meet their targets, taxpayers have to make up the difference, leaving less money for services.

Pressure on governments to increase pension contributions has mounted because of investment losses during the recession that ended in 2009, benefit increases, rising retirements and flat or declining public workforces, according to a July 27 Fitch Ratings report.

U.S. state and local government pensions logged median increases of 3.4 percent, before fees, for the 12 months ended June 30, according to data from Wilshire Associates.

New York City’s pension funds had 34.3 percent of their assets in U.S. stocks and 17.1 percent in international equities as of June 30, according to the comptroller’s website.