Comptroller John Liu and Mayor Michael Bloomberg, together with city labor union representatives, proposed long-awaited changes to the city's pension plan to clean up investment strategies and save the city money.

The proposal would give the investment authority for all five of the city's independent pension funds to one overall entity. The Investment Management Company (IMC) would be supported by a full-time investment staff, instead of the high-priced consultants the city currently relies on.

“We're overhauling an antiquated pension management system that has needed restructuring for generations,” Bloomberg said in a statement, “[by] depoliticizing the process, further professionalizing the staff and implementing industry-best practices.”

According to Liu's office, the city's pension board currently has 58 trustees who each have a different weighted vote. The five funds also utilize different investment strategies, which result in inefficiency and waste. The proposal would consolidate funds and their trustees, but leave them separate to administer benefits and make disability decisions independently.

“The city's pension system dates back more than 150 years,” Liu said in a statement. “This new paradigm will enable us to achieve better results in today's more complex financial markets.”

According to his office, the proposal aims to increase investment returns, lower pension costs, protect and strengthen them for retirees, and enhance accountability to reduce fraud and corruption.

The five funds in the city's $120 billion pension system are: the Police Pension Fund, the Fire Department Pension Fund, the Teachers’ Retirement System, the City Employees’ Retirement System, and the Board of Education Retirement System.

Currently, the funds are managed by the comptroller's Asset Management office, operating under a Chief Investment Officer (CIO) appointed by the comptroller.

The proposal would move pension management out of the comptroller's office and require the CIO, who would operate on a fixed term, to be appointed by the city's pension board. The comptroller would remain the custodian over the pension system, as is delegated in the City Charter, but the politics behind electing the CIO would be removed from the equation, Liu said.

“Depoliticizing, professionalizing, and streamlining the management of our pensions funds will enhance investment returns and reduce pension costs,” he said.

An adoption of the proposal is pending state and city legislation.