New York State Comptroller Thomas P. DiNapoli today announced employer contribution rates for the New York State and Local Retirement System (NYSLRS). Employers’ average contribution rates for the State Fiscal Year 2023-24 will increase from 11.6% to 13.1% of payroll for the Employees’ Retirement System (ERS) and from 27.0% to 27.8% of payroll for the Police and Fire Retirement System (PFRS).
NYSLRS is made up of these two systems, which pay retirement and disability benefits to public employees and death benefits to their survivors.
“The state pension fund’s performance in the fiscal year that ended March 31 was strong, but recent domestic and global economic volatility demands caution,” DiNapoli said. “As we move forward with our prudent investment strategy, we remain focused on long-term stable returns for New York’s public employers and workforce. Uncertainty may be a constant in financial markets, but the rates announced today will help ensure that New York’s pension fund will continue to be one of the nation’s strongest and best funded, ready to provide retirement security for generations to come.”
Employer rates for NYSLRS are determined based on investment performance and actuarial assumptions recommended by NYSLRS’s actuary, who is required to complete an annual report. The recommendations are reviewed by the independent Actuarial Advisory Committee and approved by DiNapoli. In addition to investment performance, other factors that impacted rates included inflation and the increased COLA for retirees, higher salary base and benefit changes enacted this year by the Legislature and Governor.
The assumed rate of return will remain at the same rate as the prior year at 5.9%. According to the National Association of State Retirement Administrators (NASRA), the only other state pension fund with an assumed rate of return lower than New York’s state pension is the Kentucky Employees Retirement System. New York manages considerably more assets than all of the 11 other systems under 6.5% combined, a testament to how well the state pension fund is managed. DiNapoli has acted conservatively and lowered the assumed rate of return of the state pension fund four times since being State Comptroller as economic and demographic conditions changes.
DiNapoli also announced that NYSLRS had a funded ratio of 102.9% at the end of fiscal year 2022. NYSLRS is consistently ranked among the nation’s best funded, best managed retirement systems in the nation. A strong funding ratio means NYSLRS has the funds available to pay out retirement benefits to its more than one million active state and local government employees, retirees and their beneficiaries.
In 2012, DiNapoli began providing employers with access to a two-year projection of their annual pension bill. Employers can use this projection in the preparation of their budgets. Projections of required contributions vary by employer depending on factors such as the types of retirement plans they adopt, salaries and the distribution of their employees among the six retirement tiers.
There are more than 3,000 participating employers in ERS and PFRS, and more than 300 different retirement plan combinations. Last fiscal year, $14.7 billion were paid out in benefits.
About the New York State Common Retirement Fund
The New York State Common Retirement Fund is one of the largest public pension funds in the United States. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. It has consistently been ranked as one of the best managed and best funded plans in the nation.