E.J. McMahon of the fiscally conservative Empire Center for New York State Policy, takes issue in a blog post today with some of state Comptroller Thomas DiNapoli’s comments yesterday about the pension fund’s performance.
DiNapoli, sole trustee of the New York State Common Retirement Fund, said yesterday that it earned an estimated 10.38 rate of return on investments for the fiscal year that ended March 31. The target rate of return was 7.5 percent. The fund’s total value grew to $160.4 billion, an all-time high. New York has the third largest public pension fund in the country.
“So happy days are here again in public pension land, right?” McMahon, senior fellow with the Empire Center, wrote today. “Um, no—not quite.”
McMahon said the “all-time high” means the pension fund—which pays out more than $9 billion in benefits a year— has “finally climbed back above the $154.6 billion level it had reached five long years ago, at the end of fiscal 2006-07, before losing 26 percent in fiscal 2008-09.”
He noted that the gain in 2011-12 was 6 percent, below the target. If the fund had hit its target every year since 2006-07, the gain would have been 56 percent.
McMahon also disputes DiNapoli’s statement that 2014-15 will be the last year employer contribution rates will reflect the 2008-09 market loss. Even if the fund meets or exceeds its annual target, on average, “it will be years more, probably the end of the decade at least, before rates subside to the expected long-term rate of 11.6 percent or less for Tier 3 and 4 ERS employees, compared to the 2013 billed rate of 18.4 percent,” he wrote.