October 28, 2008
DiNapoli Estimates Impact of Credit Crisis on Pension Fund
Global Downturn, Prolonged Volatility Cause 20 Percent Decline Since April
New York State Comptroller Thomas P. DiNapoli today said the value of the New York State Common Retirement Fund (Fund) has fallen an estimated 20 percent since April 1. DiNapoli said the decline in asset values would have no impact on benefits, and that employer contribution rates are set through March 2010. The Fund, which is audited annually, was valued at $153.9 billion as of March 31, 2008. The Fund paid out approximately $6.8 billion in benefits in fiscal year 2007-08.
“Like every investor, the Fund has felt the impact of the global credit crisis,” DiNapoli said. “But the Fund remains strong, and benefits to the more than one million retirees, beneficiaries, and members are safe and secure. Just as importantly, the state and local governments will not face any impact on their contribution rates for at least two years. Our long-term, diversified investment strategy is sound and sustainable.”
“We’re not day traders. We’re perpetual investors. The Fund is built to survive fluctuations in the market, even ones as severe as the current downturn.”
DiNapoli said that employer contributions through 2010 will not be affected by the current down cycle. DiNapoli announced in early September that the average contribution rate for state and local government employers would be 7.4 percent of payroll in 2010 -- down from 8.5 percent in 2009. The average contribution rate for police and fire departments would fall to 15.1 percent of payroll in 2010 from 15.7 percent in 2009.
DiNapoli noted that New York State has one of the strongest, best-funded pension systems in the United States, and that the Fund’s ability to meet its obligations has never been in jeopardy.
The Fund is structured to weather periods of market turbulence. In the challenging markets that followed the dot com bust and the Sept. 11, 2001 terrorist attacks, the Fund saw the value of its assets decline by about $30 billion. The Fund regained that value within two years, DiNapoli said.