Israel divestment could cost NYC pension funds $37.55 billion
A report by ADL and JLens warns that BDS-aligned divestment strategies could cost NYC pension funds $37.55 billion over ten years. The study, based on historical performance gaps, projects losses across the city's five major pension funds, affecting employees and retirees.
*this image is generated using AI for illustrative purposes only.
Israel divestment could cost New York City taxpayers more than $37 billion over a decade, according to a new report released by ADL (the Anti-Defamation League) and its affiliate, JLens. The analysis examines the potential impact of Boycott, Divestment, and Sanctions (BDS)-aligned investment restrictions on the city's pension funds, estimating approximately $37.55 billion in potential forgone value from 2025 to 2035.
The report, titled "The Impact of Israel Divestment on the New York City Pension Funds: Estimating BDS's Financial Toll on New York City Employees, Retirees and Beneficiaries," was prepared by JLens with input from subject matter experts. It compared the 10-year historical performance of two hypothetical large-cap U.S. equity portfolios: one broadly diversified and one excluding 47 major American companies targeted by the BDS movement for doing business in Israel, including Alphabet, Amazon, and Microsoft.
The analysis found an approximately two-percentage-point annualized performance gap between the portfolios. Applying this historical gap to the NYC pension funds' estimated large-cap U.S. public equity allocations over a future 10-year period resulted in the projected $37.55 billion loss. The methodology was reviewed by leading legal and financial experts, including Joshua Mitts, the David J. Greenwald Professor of Law at Columbia University.
The five NYC pension funds, which collectively manage over $300 billion in assets and constitute the fourth largest public pension system in the U.S., face the following estimated potential losses if they adopt BDS-aligned divestment strategies:
| Pension Fund | Potential Loss |
|---|---|
| Teachers' Retirement System (TRS) | $15.09 billion |
| New York City Employees' Retirement System (NYCERS) | $10.91 billion |
| Police Pension Fund (POLICE) | $7.13 billion |
| Fire Pension Fund (FIRE) | $3.02 billion |
| Board of Education Retirement System (BERS) | $1.41 billion |
| Total | $37.54 billion |
Jonathan Greenblatt, ADL CEO and National Director, highlighted the fiscal risks, stating that divestment strategies guided by the BDS campaign can be bad fiscal policy. Ari Hoffnung, JLens Managing Director and former NYC Deputy Comptroller, noted that the financial consequences would fall on the people the institutions serve, including teachers, police officers, and firefighters. This analysis builds on JLens' 2024 research on university endowments, which found that a BDS-aligned strategy applied to the 100 largest endowments could result in $33 billion in forgone gains over a decade.
How might New York City officials and pension fund administrators respond to these findings in terms of policy adjustments?
Could this report influence other major U.S. public pension systems considering similar divestment strategies?
What legal challenges or fiduciary duty claims might arise if divestment leads to significant financial losses?
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