NY Comptroller Announces Record Return For Pension Fund
New York State Comptroller Tom DiNapoli is using the strength of the state’s pension fund to push for social changes at online retailer Amazon. Capitol Correspondent Karen DeWitt spoke with the Democrat, who reports a record return on pension fund investments of nearly 34 percent, a result of the past year’s booming stock market.DiNapoli: Going back 40 years, it really is a record. If you had to look twice, I had to look three times. Because you remember last year, when we announced the return because COVID had just hit right before our March 31 valuation date, we actually ended up with a negative. We hadn't had a negative for, you know, for a decade before, minus 2.68. So you know what the markets coming back, since then we were optimistic for a positive return. But no one could have projected, you know, a 33.55% positive return, it really is historic. And it's pushed our estimated value up to $254.8 billion. Again, a record high.
DeWitt: Of course, we know though that the stock market is not the economy, it does seem like we are seeing that so called K-shaped return where, you know, people who hold a lot of stock, individuals, and you know organizations like yours are doing well, but other people are struggling.
DiNapoli: And I think that's a caution for the overall state of the economy. And at the end of the day, the markets will reflect the economy. So we don't presume that a great year like this is going to be repeated anytime soon. So you know, we still have a pretty conservative perspective. You know, keep in mind our long term assumed rate of return, which we've been lowering, as 6.8%. So, you know, my perspective right now is that we're probably still in a period of volatility, problematic, long term growth and recovery. So we're not going to deviate from the path we've been on in terms of our asset allocation. Of course, keep in mind, you know, we're talking about the stock market. While that is the biggest share of our portfolio, it is not the only place we put our money. So especially as a pension fund, we have a significant percent in fixed income, which isn't generating a big return right now. And then, of course, we have some money in the alternatives. By that, I mean private equity, real estate, real assets and so on. So a diversified portfolio typical of a large institutional investor. But, you know, we certainly are anticipating a problematic recovery. And we're delighted that we had such a great return this year, but not projecting another 33% return for next year.
DeWitt: I want to ask you about Amazon, there's a shareholders meeting, I believe it is today, as we're talking on Wednesday, right? And you're asking for an independent review of the company's impact essentially on racial issues, right, civil rights, diversity inclusion, how does this come about? Why do you have concerns?
DiNapoli: Well, you know, there's been so many of us in the country as Americans, and from our perspective as an investor, in the aftermath of the George Floyd killing and the renewed discussion of racial justice and racial reckoning, we really do believe that corporations have an important role to play in this regard. And corporations that do not do their own policing in terms of policies and practices, and dealing with issues of equity, diversity and inclusion, they put our investments at risk. So in the case of Amazon, which obviously is become a big presence, bigger every day, through the pandemic, and all of our lives as a big and very important holding in our pension fund, there have been a number of issues raised about their workplace practices, particularly with regard to racial issues, treatment of employees, how some of their business practices have impacted on communities of color. So you know, the leadership at Amazon has said they support issues related to racial justice in the aftermath of the Floyd killing. But we think their actions from a corporate leadership perspective have not matched their words. So we're asking the shareholder proposal for Amazon to do what's called a racial equity audit. So that would really be an independent review of their policies and practices and to see what mechanisms they're putting in place to make sure that their goals in terms of diversity, equity inclusion, in fact are being met.
DeWitt: It's becoming kind of a fight between you and Amazon. I read that the Amazon tried to get the SEC to block your proposal. So do you expect there to be tensions today?
DiNapoli: They tried to knock it off the ballot. And we were very fortunate that the SEC upheld our right as a shareholder to present this and, you know, we've seen other companies, Facebook, Starbucks, they've done these racial equity audits and other corporations where you've seen a significant percentage of shareholders have been voting in favor of these proposals. So you know this is for New York pension fund. This is our first shareholder proposal in this regard, but again, given the overwhelming presence of Amazon in our lives and their importance in our portfolio, we felt it was a very appropriate step for us to present this to Amazon. And look, we'll see where it goes. Obviously, Mr. [Jeff] Bezos hauls a significant part of the voting shares at Amazon. So we'll see what kind of a vote we get. But we think we're on the right side of history on the right side of investor responsibility of putting this proposal forward.
DeWitt: Now, you've called on Governor Andrew Cuomo to resign over his various scandals, including sexual harassment allegations, you authorized the State Attorney General to conduct an investigation over the governor's $5 million book deal. You called for him to resign. He hasn't left and, you know, it's been a couple of months now. So what do you think? Do you think he should still leave office? Do you think he deserves another chance?
DiNapoli: Well, you know, I offered that opinion, going back several weeks now, and my concern was, you know on his ability to, you know, carry out the responsibilities of the governorship, especially during a very, very challenging time. You know, I haven't changed my opinion. But on the other hand, I don't have anything additional to add to that. So, you know, he's got to make his own judgments. We'll see what happens with the various investigations that are underway. In the meantime, you know, it's important that we all focus on getting us through this COVID recovery and staying focused on meeting the needs of the people the state of New York.
DeWitt: Have you worked with the governor since then or had any conversations with him since that day?
DiNapoli: You know, institutionally we continue to work, you know, with the second floor. It’s part of our responsibility. I haven't had any personal contact with governor.