New York State Comptroller Thomas P. DiNapoli today announced employer contribution rates for the New York State and Local Retirement System (NYSLRS) for State Fiscal Year (SFY) 2024-25. Employers’ average contribution rates will increase from 13.1% to 15.2% of payroll for the Employees’ Retirement System (ERS) and from 27.8% to 31.2% 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 state and local public employees and death benefits to their survivors. There are more than 3,000 participating employers in ERS and PFRS, and more than 300 different retirement plan combinations. Last fiscal year, $15.5 billion were paid out in benefits.
“Our state’s pension fund remains one of the strongest pension funds in the nation, and the rates announced today will help ensure that public workers and their families can rely upon the retirement benefits promised to them,” DiNapoli said.
DiNapoli also announced that NYSLRS had a funded ratio of 90.3% as of March 31, 2023. NYSLRS is consistently ranked among the nation’s best funded retirement systems. A high funding ratio means NYSLRS has the funds available to pay out retirement benefits to its more than 1.2 million members, which includes nearly 700,000 current and former state and local government employees and more than 500,000 retirees and their beneficiaries.
Employer rates for NYSLRS are determined based on investment performance and actuarial assumptions recommended by NYSLRS’s actuary, who is required to review the actuarial assumptions and issue 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 higher salaries.
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 benefit plans adopted, salaries paid, and the distribution of employees among the six membership tiers.
The New York State Common Retirement Fund’s long-term assumed rate of return will remain at 5.9%. DiNapoli has been a leader in the trend of public pension funds lowering their assumed rates of return to better enable New York to weather volatile markets. The investment return assumption median for public pension funds was 7% in July 2023, according to the National Association of State Retirement Systems. The Kentucky Employees Retirement System was the only state with an assumed rate of return lower than New York state.