(Reuters) - A contested plan to consolidate the management of New York City's public pension funds, which was presented in 2011 as a way to depoliticize the system and improve returns, will be dropped by Comptroller John Liu, a source familiar with the situation said on Saturday.
"Liu is pulling" the plan, said the source, who requested anonymity. "Most unions were never really supportive because they believed the city should give some kind of collective bargaining credit to the unions" in return for their agreement.
The comptroller's decision to relinquish the plan was first reported by the New York Post, citing unnamed sources.
Investment decisions for the five New York City pension funds, whose value was estimated at $110 billion last February, are now made by five separate boards, which include union representatives and outside fund managers.
Mayor Michael Bloomberg, an independent, and the Democratic comptroller announced the proposed reform last October, saying the current system would be replaced by a chief investment officer reporting to a new board made up of representatives from the mayor's office, the comptroller's office and the unions.
Some outside investment managers, who earn lucrative fees for managing the funds, were to be replaced by in-house staff.
The aim of the plan was to save money, by fattening the pension funds' returns and lowering management costs.
"We're overhauling an antiquated pension management system that has needed restructuring for generations - depoliticizing the process, further professionalizing the staff and implementing industry best practices," Bloomberg said when he and the comptroller announced the proposal.
A spokesman for Liu was not immediately available. A spokesman for Bloomberg had no immediate comment.
(Reporting By Joan Gralla; Editing by Peter Cooney)
Director of Minnesota's Troubled Obamacare Exchange Resigns Following Tropical Vacation | Guy Benson