The state pension fund gained about 10.4 percent on its investments during the recently ended 2012-13 fiscal year, Comptroller Thomas DiNapoli announced today. The latest gain is comfortably above the pension fund’s 7.5 percent target rate of return.

dinapoli1-7802022

So happy days are here again in public pension land, right?  Um, no—not quite. A couple of points:

  1. DiNapoli is quoted as saying that the pension fund’s asset values as of the March 31 end of the 2012-13 fiscal year had reached had “an all-time high” of $160.4 billion. This is simply another way of saying that the fund has finally climbed back above the $154.6 billion level it had reached five long years ago, at the end of fiscal 2006-07, before losing 26 percent in fiscal 2008-09.
  2. This year’s 10.38 percent gain, nicely exceeding the 7.5 percent target rate of return, is on top of a sub-par gain of about 6 percent in 2011-12. With double-digit gains in each of three of the last four years, the fund’s assets have returned a net 27 percent since fiscal 2006-07. But if the fund had hit its target return rate in each of those years, its gain since 2006-07 would have been 56 percent. In short, the fund is still in the hole to the tune of tens of billions of dollars, while paying out more than $9 billion in benefits a year. Taxpayers are stilldigging out of it.

DiNapoli also says that 2014-15 will be “the final year that employer contribution rates will reflect the market loss of 2008-2009.”  That’s not right, though. Barring a repeat of the 2003-07 economic and market bubble, it will be years more, probably the end of the decade at least, before rates subside to the expected long-term rate of 11.6 percent percent or less for Tier 3 and 4 ERS employees, compared to the 2013 billed rate of 18.4 percent.  This assumes the fund meets or exceeds its target every year, on average.

Perhaps the comptroller meant to say that 2014-15 will be the last year that contribution rates must increase to make up for 2008-09 losses. That’s probably the case, but it doesn’t mean pension rates will never again increase.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

DiNapoli bolsters pension fund stability—and cuts tax-funded costs

DiNapoli announced today that he's approved a recommendation by the State Retirement System Actuary to reduce, from 6.8 percent to 5.9 percent, the assumed rate of return (RoR) on investments by the $268 billion Common Retirement Fund, which underwrites the New York State and Local Employee Retirement System (NYSLERS) and Police and Fire Retirement System (PFRS), of which the comptroller is the sole trustee. Read More

The Gov’s pension

There are several (dozens? hundreds?) of unanswered questions as the fallout from Andrew Cuomo's resignation earlier today continues. Among those are questions related to his pension, some of which can be answered, sort of. Read More

NYSTRS bill to drop again

The New York State Teachers' Retirement System (NYSTRS) will reduce its pension contribution rates for a third consecutive year in 2017-18, even though the pension fund's investment returns came in well below its target rate in fiscal 2016. Read More

The new (old) normal of NY pensions

The Empire State's largest public pension plan still has not fully recovered from the financial crisis and Great Recession of 2008-09, a new report from the state comptroller's office confirms. Read More

DiNapoli’s “slight gains” in context

New York's largest public pension fund earned 2 percent in its first fiscal quarter—which isn't necessarily good or bad news for taxpayers. Read More

NYC pension costs shooting up

Taxpayer-funded pension contributions in New York City will need to increase by a total of $732 million between fiscal years 2018 and 2020 due to the pension funds' paltry investment earnings in the recently concluded 2016 fiscal year, City Comptroller Scott Stringer has just disclosed. Read More

Skelos pension could exceed $95k

Following his conviction on federal corruption charges, former Senator Dean Skelos apparently will qualify for a public pension of up to $95,590 a year. Read More

A losing quarter for NYS pensions

Still betting far too heavily on the stock market, New York State's main state and local government pension fund lost money in the first half of its current fiscal year. Read More

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!