New York State Pension Will Lower Assumed Rate of Return to 7%Freeman Klopott
Comptroller Thomas DiNapoli lowered New York state’s pension fund’s assumed rate of return to 7 percent from 7.5 percent.
DiNapoli, sole trustee of the $184.5 billion fund, was advised by the fund’s actuary to lower the rate in an annual report released Friday. The comptroller, a Democrat, has indicated he’ll follow the advice. In 2010, DiNapoli lowered the long-term return rate from 8 percent.
The move is meant to help stabilize the fund, DiNapoli said in an Aug. 24 radio interview.
“We ultimately have to be sure we’re keeping our New York state fund in good shape,” he said.
The actuary looked at the fund’s gains and losses over the past five years to determine the new rate. It’s used to calculate contributions that must be made by state and local governments so the fund can meet its obligations to 1 million current public workers and retirees. A drop in the rate could slow the decline in those costs for the governments, which almost tripled from 2010 to 2014.
State public-worker pension funds have been lowering their assumed rates of returns as they account for the 2008 market crash and expect volatility going forward.
New York’s fund returned almost 7.2 percent in the fiscal year ending March 31, raising its value to a record despite missing the target. As of April 2014, the funded ratio was 92 percent, according to budget documents.
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