DiNapoli: Annual Report Shows
Pension Fund Exceeded Benchmarks
DiNapoli Enhances Oversight, Disclosure as Fund Remains Strong
New York State Comptroller Thomas P. DiNapoli today announced the release of the audited 2006-2007 Comprehensive Annual Financial Report (CAFR) for the $154.5 billion New York State Common Retirement Fund, which is the third largest public pension fund in the U.S. The report, which details the state pension fund’s activities from April 1, 2006 to March 31, 2007, was audited by Deloitte & Touche LLP and Toski, Schaefer & Co. In each of the past three years, the Government Finance Officers Association has awarded the Fund its Certificate of Achievement for Excellence in Financial Reporting.
“The Common Retirement Fund is as strong and as secure as ever,” said DiNapoli, who as State Comptroller is sole fiduciary of the Fund. “Our broad-based diversification strategy — by asset class, by market sector and by geography — is working the way it’s supposed to work. The CAFR is clear evidence of last year’s performance, and the Fund is continuing that strong performance through the first half of this year.”
DiNapoli noted that the Fund’s 12.58 percent return for the fiscal year that ended March 31 exceeded the Fund’s benchmark of 8 percent. The Fund’s performance enabled DiNapoli to lower the rates local governments contribute to the Fund and save taxpayers millions of dollars.
Since taking office in February, DiNapoli has implemented several reforms related to management of the Common Retirement Fund, including:
- Implementing a new placement fee policy to increase disclosure and weed out conflicts of interest;
- Issuing an executive order on mandatory ethical practices for all OSC employees;
Creating a new office of Inspector General; and
- Hiring a Special Counsel on Ethics.
With a funded ratio of 104 percent, the Fund is one of the best funded public pension funds in the nation. The ratio compares the assets of the fund with its projected liabilities. The Wilshire’s Trust Universe Comparison Service (TUCS), the most widely accepted benchmark for the performance of institutional assets, ranks the Fund’s results in the top 10th percentile of public funds and notes that the Fund has one of the lowest risk return profiles among public pension funds. The Fund assets have grown to $154.5 billion from $140.7 billion at the end of the 2006 fiscal year. The Fund paid out more than $6.6 billion in benefits during 2006-07.
Approximately 70 percent of Fund assets are invested in domestic and international equities, with about 30 percent invested in fixed-income securities. Some of the Fund’s smaller allocation areas — such as Real Estate and Private Equity, which together account for about 10 percent of Fund assets — generated returns of about 30 percent over the past year, according to the CAFR.
“The ongoing investigation into the Hevesi administration has underscored the need for reforms,” DiNapoli said. “We’ve made a number of management improvements already, and we’ll be making more changes to increase transparency and public scrutiny. I want our office to set a standard for transparency and ethics. Despite whatever transgressions may have occurred under the former Comptroller, our internal controls prevented any assets from being at risk. The pension fund is as strong as ever, and the benefits of the one million members and retirees are safe and secure. ”
The New York State and Local Retirement System publishes the CAFR annually in conformance with generally accepted accounting principles as established by the Governmental Accounting Standards Board.
As the Fund’s sole trustee, DiNapoli employs in-house investment professionals and external consultants to help manage the Fund. The Comptroller also consults with the Advisory Council for the Retirement System; the Investment Advisory Committee; the Real Estate Advisory Committee; and the Actuarial Advisory Committee.
Click here for the CAFR