The state’s Teachers Retirement System said its rate of return was 5.2 percent for last fiscal year and will lower its expected rate of return from 8 percent to 7.5 percent a year.

The lowered assumed rate comes after years of criticism from fiscal watchdogs that the $109.7 billion retirement system was sticking to a lofty 8 percent return rate — and thus straining the fund.

“The revised assumptions are more consistent with recent member experiences and future expectations,” John Cardillo, the fund’s spokesman, said in an email.

The fund provides benefits to 426,000 educators in New York, including nearly 268,000 active members and more than 158,000 retired members and beneficiaries.

The rate of return for the fiscal year that ended June 30 was less than its five- and 10-year averages. Over the past five years, the fund had a rate of return of 12.4 percent and over 10 years, 7.2 percent; it was 8.4 percent over 20 years, Cardillo said.

The state’s pension fund for state and municipal workers ended its fiscal year March 31with a 7.16 percent rate of return.

The state pension fund, which includes 1 million state and local workers and retirees, in 2010 lowered its estimated rate of return to 7.5 percent a year and dropped it 7 percent in September.

““From a long-term perspective, we think it’s a prudent move in that it better positions the fund to have more realistic expectations about what our investment returns will be,” Comptroller Thomas DiNapoli said at the time.

The teachers’ pension fund should have lowered its assumed rate of return less than 7.5 percent, said E.J. McMahon, president of the Empire Center, a fiscally conservative group in Albany. He said the lower the rate, the less pressure it puts on school budgets to make up the difference when the target is missed.

McMahon wrote on his blog that the “move to 7.5 percent from 8 percent is a belated step in the right direction — but a very small one. Given the harrowing lessons of the financial crisis, during which pension funds lost 20 to 30 percent, it’s also at least five years too late.”

Improved times on Wall Street has eased some of the pressure on schools and municipalities to pay for the pensions.

Schools this year are required to put 13.26 percent of payroll to fund the pension system, which is a 24.4 percent decline from last year.

In its annual report, the teachers retirement fund said that the average pension was $40,689 last year, with 80 percent going to New York residents; 76 percent of the system members were women.

The pension system is for schools outside New York City. It includes 4,664 active members from Buffalo schools, 3,878 from Rochester and 2,052 from Yonkers, the annual report said.

Overall, the system had 2,284 retirees and beneficiaries in Broome County; 1,064 in Chemung County; and 955 in Tompkins County.

In the Hudson Valley, the system had 6,285 in Westchester County; 3,032 in Dutchess County; and 2,272 in Rockland County.

In western New York, Erie County has 10,291 retirees and beneficiaries and Monroe County had 8,200.

© 2015 Gannett News Service

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