Monthly Archives: April 2021

NYSLRS and Public Employers: A Partnership That Works

When the Retirement System was created in 1921, it served a single employer: New York State. But that would quickly change as a series of new laws allowed local governments and other public employers to join the system.

In May 1922, Steuben County was the first county to join, and Newburgh became the first city the following month. In 1923, Onondaga was the first town and Avon was the first village to sign on. The Roosevelt Public Library on Long Island became the first library to join in 1924. In 1935, the system was opened to school districts and other public employers.

NYSLRS and Public Employers partnership

The NYSLRS Partnership

Today, close to 3,000 public employers participate in NYSLRS, and they employ about two-thirds of the system’s roughly half million active members. These employers’ active involvement has helped make NYSLRS one of the largest public retirement systems in America, serving 1.1 million members, retirees and beneficiaries.

This partnership includes a shared commitment to providing secure pension benefits to New York’s public employees. Participating employers make annual contributions to help fund the future benefits of their employees. Each year NYSLRS’ actuary calculates the contribution rates required to ensure that adequate assets are being accumulated to pay benefits. These contributions along with member contributions and our investments are what fund promised benefits. As a result, NYSLRS is one of the best-funded public retirement system in the country, with an estimated Fund value of $254.8 billion as of March 31, 2021.

How NYSLRS Benefits Public Employers

Being part of NYSLRS allows municipal employers, regardless of their size, to offer prospective workers an attractive benefits package, including a defined benefit pension. With a defined benefit pension, those employees can be assured of a lifetime benefit during their retirement years.

In a recent survey, a majority of public employees said pensions are an important recruiting and retention tool. Eighty-six percent cited retirement benefits as a major reason they stay in their jobs. Another survey indicated that the general public agrees that pensions, particularly for public safety employees, are a good way to recruit and retain public workers.

How NYSLRS Benefits Communities

The benefits provided by NYSLRS help ensure that local governments can attract qualified and committed people to perform essential public services. Our members are police officers, firefighters, forest rangers and nurses. They plow roads, monitor water supplies, drive school buses, inspect restaurants, process unemployment claims and provide other vital services.

What’s more, after they retire and begin collecting their pensions, most NYSLRS members remain in New York, where they continue to contribute to their communities. In 2019, spending by NYSLRS retirees generated more than $15 billion in economic activity statewide and helped create an estimated 77,900 jobs.

The Common Retirement Fund: 100 Years of Strength and Security

In 1921, NYSLRS’ pension fund held several million dollars and provided benefits to just a few dozen State employees. Today, the Common Retirement Fund (Fund) provides more than a billion dollars per month to hundreds of thousands of retirees and beneficiaries.

The System’s founders showed foresight in establishing the framework for a sustainable retirement system capable of providing long-term pension security for its members and retirees. Today, one hundred years later, we are considered one of the strongest public pension funds in the country, thanks in large part to the stewardship of Comptroller DiNapoli, trustee of the Common Retirement Fund and administrator of NYSLRS for the past 14 years.

Comptroller DiNapoli’s diligent efforts to maintain the financial well-being of the Fund, the fact that NYSLRS’ participating employers contribute their share into the Fund, and New York’s constitutional requirement that lifetime pension benefits be guaranteed to all NYSLRS retirees — all these elements combine to ensure that NYSLRS retirees will enjoy secure benefits for generations to come.

Common Retirement Fund - A Snapshot of Growth

Investments

The Common Retirement Fund has been widely recognized as one the best-funded and best-managed public pension fund’s in the nation. (In June 2020, the Pew Charitable Trusts ranked NYSLRS as the second-best-funded public retirement system in the nation, based on 2018 data.) The cornerstone of the Fund’s reputation is its sound investment policies. At the direction of Comptroller DiNapoli, Fund managers use a long-term investment strategy designed to take advantage of growth opportunities during good economic times, while helping the Fund weather economic downturns.

The Comptroller seeks the input of a wide range of internal and external advisors, consultants and legal counsel who help to determine the best investment choices and allocation of assets for the Fund. These advisors provide independent advice and oversight of all investment decisions, serve as part of the chain of approval on all investment decisions before they reach the Comptroller for final approval and participate on advisory committees that meet periodically throughout the year.

Fund assets are invested in a diversified portfolio. About 55 percent of the assets are invested in publicly traded stocks. Other investments include bonds, mortgages, real estate and private equity.

The Fund is also strengthened by a forward-looking approach to addressing climate change-related investment risks and capitalizing on the opportunities created by the transition to a low-carbon economy. Comptroller DiNapoli recognizes that climate change poses an enormous threat to the global economy and to the Fund’s investment portfolio. Recently, he announced plans to transition the Fund’s portfolio to net zero greenhouse gas emissions by 2040. This process will include a review of investments in energy companies and, where consistent with his fiduciary responsibility to maintain the long-term financial health of the Fund for NYSLRS members, divestment of companies that don’t meet minimum standards. This policy will help ensure that the Fund adapts to a changing global economy and maintains its growth in coming decades.

The Common Retirement Fund’s Impact on New York Businesses

The Common Retirement Fund’s In-State Private Equity Program invests in new and expanding New York companies and makes capital available to qualifying small businesses. As of March 31, 2020, the Fund’s private equity portfolio included investments in over 330 New York businesses with a total value of $1.9 billion. These investments boost the State’s economy while at the same time generating significant returns for the Fund.

Looking Forward

As the Common Retirement Fund’s assets have grown over the years, so have its obligations. As of March 31, 2020, there were 487,407 NYSLRS retirees and beneficiaries, who were paid $13.4 billion in benefits over the previous year. That’s up from 67,689 retirees and beneficiaries, who were paid $194 million in benefits in 1971. Roughly a third of NYSLRS members are expected to retire over the coming decade.

Comptroller DiNapoli’s focus on continuing the Fund’s record of strong growth ensures that the Retirement System will be ready to meet the challenges of the future. The New York State Common Retirement Fund’s estimated overall investment return was 33.55 percent for the State fiscal year that ended March 31, 2021, reflecting the financial markets’ dramatic rebound from lows reached during the COVID-19 pandemic. The return on investments increased the Fund’s value to an estimated $254.8 billion. More than 1.1 million NYSLRS members, retirees and beneficiaries can continue to rely on the Retirement System for their retirement security.