Tag Archives: investments

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 return in the third quarter of State Fiscal Year 2020-21 was 10.01 percent for the three-month period ending December 31, 2020, and the Fund ended the quarter with an estimated value of $247.7 billion. More than 1.1 million NYSLRS members, retirees and beneficiaries can continue to rely on the Retirement System for their retirement security.

Countdown to Retirement — Eight Months Out

Once you decide to retire and begin preparing, the final months leading up to your retirement date go by quickly. Previously, we discussed the steps to take when you’re 12 months away from retirement. As we continue our Countdown to Retirement series, let’s take a look at what you should be doing eight months out.

Eight Months Out: Review Retirement Income

Some experts say that you need 80 percent of your pre-retirement income to maintain your standard of living once you stop working. There’s a good chance that your NYSLRS pension alone won’t provide that level of income. With retirement lasting 20 years, 25 years or even longer, it’s important to have a plan in place for the extra income you’ll need.

That’s why, at least eight months before your planned retirement date, you should start reviewing any other income you’ll have available. Some common sources include:

Check out our Straight Talk About Financial Planning for Your Retirement publication for monthly income and expense worksheets to help you assess your retirement finances.
Countdown to Retirement - Eight Months Out

Counting Down

Your planned retirement date is less than a year away. As the day gets closer, check out the rest of our Countdown to Retirement series for posts covering your retirement budget, what we accept as proof of your date of birth, what to do after you’ve filed your Application for Service Retirement (RS6037) and more.

Investing in a Cleaner Future

Saturday is Earth Day. Since 1970, April 22 has been set aside as a day to draw attention to environmental issues. Today, 47 years after the first Earth Day, we face perhaps the greatest threat to the planet: climate change as a result of carbon emissions.

As trustee of the New York State Common Retirement Fund (CRF), Comptroller Thomas P. DiNapoli seeks sound and sustainable investments in strategies and companies that are developing and using low-carbon technologies.Comptroller DiNapoli's Sustainable Investment Strategy

The CRF’s investments in New York-based companies such as Crystal IS in Green Island and the High Sheldon wind farm in Sheldon are examples of low-carbon investment opportunities that provide solid returns for the Fund, create jobs and generate local tax revenues, while helping promote a lower carbon economy.

As an investor, DiNapoli continually seeks improvements in environmental practices and lower carbon emissions from the companies in the CRF’s portfolio. For example, he has asked Exxon­Mobil* and other portfolio companies to explain how they can adjust their business model to meet the worldwide effort to limit global warming, and has urged the Securities and Exchange Commission to ask fossil fuel companies to explain how they are addressing climate change. The CRF has created a $2 billion public equity index that excludes or reduces investments in the worst carbon emitting corporations, and increases CRF’s investments in companies that are lower emitters. In addition, DiNapoli has increased the CRF’s total commitment to sustainable investments to $5 billion to take advantage of the growing low carbon economy.

The Comptroller’s sustainable investment strategy is crucial to the long-term health of the CRF. Addressing investment risks presented by climate change is a major part of that strategy. Rising seas, severe storms, floods and droughts are likely to disrupt the global economy. Moving toward a low carbon future reduces risk to the CRF’s investments, spurs innovation and opens new investment opportunities.

*Update: Recently, ExxonMobil agreed to implement the CRF’s shareholder request, which received landslide support from more than 62 percent of Exxon voting shareholders.

“I am pleased Exxon has agreed to undertake this important analysis,” said DiNapoli. “Climate change is one of the greatest threats to our pension fund’s long-term value. Exxon’s decision demonstrates that investors have the power to hold corporations accountable and to compel them to address our very real climate-related concerns. We will continue to monitor Exxon’s response to climate change as we urge the company, and others in the energy sector, to find ways that they can adapt to the growing lower carbon economy.”

Links:

http://www.bbc.com/news/science-environment-39329304

http://time.com/4082328/climate-change-economic-impact/