NY Comptroller DiNapoli accused of massively underinvesting retirement fund, costing taxpayers billions, by challenger

ALBANY – Longtime State Comptroller Tom DiNapoli’s been accused of ineffectively investing the state’s gargantuan $291 billion common retirement fund, leaving taxpayers on the hook for billions.

One of DiNapoli’s long-shot primary challengers — housing non-profit CEO and state comptroller candidate Drew Warshaw — bashed the comptroller for presiding over a nearly 400% increase in spending on Wall Street investment managers’ fees, far outpacing the funds’ returns.

The shocking uptick in spending was uncovered in a report authored by Warshaw “in consultation” with Ryan Cummings, an economist at Stanford University, that was shared exclusively with The Post.

“We’re talking about the third largest fund manager in the entire country who drastically underperformed his own benchmarks for nearly 20 years and crushed taxpayers in the process while enriching hundreds of bankers in the middle of an affordability crisis,” Warshaw said.

State Comptroller Tom DiNapoli has held his office since 2007, when he was picked to fill the vacancy created by the resignation of Alan Hevesi. STEFAN JEREMIAH

Warshaw models his “alternative approach” in his paper based on data extracted from the Common Retirement Funds’ annual financial reports.

He points out that DiNapoli has hired more active investment managers — who charge sometimes hefty fees — to seek a higher return on the funds’ investment. 

“Had the Comptroller simply paid the lower, fractional cost of investing in a diversified set of index funds instead of paying hundreds of investment managers $11.3 billion in fees, the Comptroller would have saved New York taxpayers $59.1 billion,” Warshaw states in the paper.

The roughly $60 billion price tag for taxpayers appears in payments into the fund from the state and municipalities over DiNapoli’s 18 years in office.

DiNapoli’s team said hiring more investment managers is justified, given the rise of new, diverse asset classes since he took office just before the 2008 financial crisis. They also largely brushed off Warshaw’s conclusions as flawed.

Drew Warshaw is running a long-shot primary to unseat DiNapoli, a long-time incumbent. Drew Warshaw campaign

“This guy can’t even do basic math,” said DiNapoli’s campaign manager, Daniel Pereira, blasting Warshaw’s model as faulty and unreliable.

“New York’s pension plan is virtually fully funded and one of the strongest in the nation. Any plan that moves away from a well-diversified portfolio, especially one based on a shoddy report full of math mistakes, endangers the retirement security of more than a million working families. New York taxpayers deserve better,” DiNapoli’s rep added.

Warshaw stood by his approach.

DiNapoli faces an unusually contested primary for the traditionally sleepy downballot office. He’ll have to fend off Warshaw along with ex-Kansas legislator Raj Goyle and ex-Central Brooklyn congressional candidate Adem Bunkeddeko.

Health care company CEO and Wall Street investor Joseph Hernandez is running on the GOP side.