Employer contribution rates for the state's pension system in State Fiscal Year 2019-20 will be in line with the previous year, with the Employees' Retirement System (ERS) getting a slight decrease and the Police and Fire Retirement System's (PFRS) rate unchanged, New York State Comptroller Thomas P. DiNapoli announced today. DiNapoli also reported the New York State Common Retirement Fund (Fund) grew stronger and ended the last fiscal year with a funded status of 98 percent, according to actuarial calculations.
"Solid investment returns help keep contribution rates stable and that provides predictability for employers as they plan their future budgets," DiNapoli said. "New York State's pension fund is one of the strongest and best funded in the country and protects the retirement security of our over one million members."
The Fund's investment rate of return was 11.35 percent with an audited value of $207.4 billion at the end of its fiscal year on March 31, 2018. Strong returns raised the Fund's funded ratio to 98 percent in SFY 2017-2018, up from 94.5 percent the previous year, as measured in compliance with Government Accounting Standards Board guidelines. The Fund was ranked one of the nation's best-funded pension plans in 2018, according to Pew Charitable Trusts.
The estimated average contribution rate for participating employers in the ERS will decrease in SFY 2019-20 from 14.9 percent of payroll to 14.6 percent of payroll. The estimated average contribution rate for participating employers in the PFRS will remain at 23.5 percent of payroll.
Employer rates for the New York State and Local Retirement System (NYSLRS) are determined based on investment performance for the past five fiscal years and actuarial assumptions recommended by the Retirement System's Actuary and approved by Comptroller DiNapoli. A copy of the Actuary's report can be found here.
In 2015, the Actuary conducted a review of the economic and demographic experience of NYSLRS for the prior five years. Based on that report, DiNapoli lowered the assumed rate of return in 2015 from 7.5 percent to 7 percent. The median assumed rate of return among public pension funds is 7.46 percent as of June 2018, according to the National Association of State Retirement Administrators.
In 2012, DiNapoli began providing employers with access to a two-year projection of their annual pension bill six weeks earlier than in previous years. Employers use this projection in the preparation of their budgets.
Projections of required contributions vary by employer depending on factors such as the types of retirement plans they adopt, salaries and the distribution of their employees among the six retirement tiers.
There are more than 3,000 participating employers in ERS and PFRS, and 334 different plan combinations.
Payments based on the new rates are due by Feb. 1, 2020, but may be pre-paid by Dec. 15, 2019.
About the New York State Common Retirement Fund
The New York State Common Retirement Fund (Fund) is the third largest public pension plan in the nation with an audited year-end value of $207.4 billion in assets (as of March 31, 2018) held in trust for the retirement security of the more than one million members of the New York State and Local Retirement Systems (NYSLRS). As a long-term investor, the Fund has an investment approach which capitalizes on market opportunities and weathers market ups and downs. The Fund is widely regarded as one of the nation's best-managed and best-funded pension plans.