Turning up the heat on Wall Street to keep it out of the Social Security debate, three New York City Employees' Retirement System trustees are questioning whether firms that support privatization can act in the best interest of the system's members.

The trustees - labor union representatives acting as part of a nationwide union drive to defeat President George W. Bush's plan for private Social Security investment accounts - recently wrote to the financial firms that manage the pension fund asking their position on privatization.


"If they are engaging in partisan political activities, are they acting in the best fiduciary interest of our members?" asked Michael Musuraca, who represents retirement system trustee Lillian Roberts, executive director of the American Federation of State, County and Municipal Employees District Council 37.

Financial firms have largely stayed out of the privatization fracas lest they be accused of trying to profit from Social Security reform. Most say they have no position on the president's plan.

The trustees say Bush's proposal would jeopardize system members' retirement income because it would reduce their guaranteed Social Security benefits and make it difficult to plan for their post-work years. The New York City Employees' Retirement System covers about 200,000 active members and 120,000 retirees.

The president's proposal would allow workers to divert up to 4 percentage points of their Social Security payroll taxes into private investment accounts. The shift would likely reduce guaranteed benefits.

Roberts, along with trustees Roger Toussaint, president of Transport Workers Union Local 100, and Carroll Haynes, president of International Brotherhood of Teamsters Local 237, contacted JP Morgan Chase, Merrill Lynch, Morgan Stanley, T. Rowe Price, Barclays Global Investors, Bank of New York and State Street.

When called by Newsday, the firms said they didn't have a position, declined to comment or did not return calls.

Musuraca said State Street replied that it took a position against private accounts in 2002. He said the remaining firms responded that they have no position.

The labor trustees are acting on their own and have not brought up the issue before the 10-member board, Musuraca said. The retirement system board has not taken a stance on privatization, but members are free to speak for themselves, said Joanna Perlman, spokeswoman for trustees chairwoman Martha Stark, the city's Finance Department commissioner.

The union trustees' efforts are part of a larger drive by the AFL-CIO to defeat Social Security privatization. The labor union has been very vocal in recent months, demonstrating at various financial firms around the nation.

The union claimed credit for prompting several institutions, including Edward Jones, a brokerage firm, and the Financial Services Forum, an industry group of financial services firms' executives, to end their support of a pro-privatization advocacy group in recent weeks. 
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