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State retirement fund continues recovery

New York's retirement fund for state and local government workers continued to recover last year after shrinking during the recession, growing to a record $176.2 billion and posting a 13 percent return on investments, Comptroller Thomas DiNapoli said Monday.

"It certainly shows that the public employees and their families can depend on this fund for their security," DiNapoli said. "For government employers and, by extension taxpayers, the good news is we had a very good return."

The increase in fund value follows several years of contraction due to the recession, when investments performed poorly and municipal governments had to increase their contributions to the Common Retirement Fund.

Between 2008 and 2009, the fund shrank by 29 percent, from $153.8 billion to $108.9 billion. But the value has recovered steadily since then, DiNapoli's office said.

The state allowed localities to manage the strain by spreading their contributions over time, until the economy improved, and both Nassau and Suffolk took advantage of the program.

The retirement fund covers 644,000 active employees and currently pays benefits to 387,000 retirees. It paid out $49.7 billion in the fiscal year that ended March 31.

Nearly 38 percent of the state's Common Retirement Fund was invested in domestic equities, which had a return of 22.3 percent for the fiscal year.

Last year the fund was worth $160.7 billion, earning a 10.38 percent return on investments.

In some years, the state has been able to reduce local government contributions when the fund's returns were strong. Last year, DiNapoli's office was able to lower contribution rates by 0.8 percent for state and local government workers and 1.3 percent for police and firefighters.

In the past 20 years, the fund's investment returns have been responsible for 80 percent of government employee benefits. The fund is the third-largest public pension fund in the United States after two in California.

In the past 20 years, the fund's investment returns have covered 80 percent of government employee benefits.

The comptroller's office will announce at the end of August whether the fund's performance will translate into lower contributions for local governments.

"That would certainly be good news for counties," said Mark LaVigne, deputy director of the New York State Association of Counties. "In 2001, counties paid $47 million in pension contributions.

"In 2013, counties contributed $1.2 billion; in a 12-year period, the county contribution for state and local retirement system increased by over 2400 percent."


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