August 15, 2011
By New York State Comptroller Thomas P. DiNapoli
Over the past few years, the future of public pensions has been a source of tremendous discussion and debate across the nation. Week after week, negative stories come out of states like Rhode Island, New Jersey and Illinois, where public pension plans are seriously underfunded and overburdened. Too often, the media coverage – much of it misleading dumps all state pension plans into the same pool of fiscal stress, suggesting that all are in trouble and unsustainable.
Let me set the record straight.
From its inaugural year in 1921, when it served 4,600 members, the New York State Common Retirement Fund has grown into a system with 3,000 employers and more than one million members. In 2011, the Fund was cited by the Pew Center on the States and Governing Magazine as being among the best-funded and best run in America. In its 90th year, the New York Retirement System, supported by the Common Retirement Fund, remains one of the strongest, most sustainable public pension systems in America. We look great for ninety years old.
The proof is in the numbers. With a healthy annual return of 14.6% for fiscal year 2010-2011, the Fund now has assets totaling $146.5 billion, the highest since the economic downturn of 2008-2009.
Decade after decade, we have required the state and local governments to make their payments to the Fund. And unlike some states that have skipped their annual payments sometimes for years – New York State has never missed a payment.
While I share the concerns about the impact of rising pension costs on the State and local budgets, we should also remember that the outstanding performance of the Common Retirement Fund since the 1980’s significantly subsidized pension costs for employers. Pension costs are rising currently because of the impact of the global financial crisis in 2008-2009, not because of benefit levels. When the Fund recovers that loss and the economy continues to improve (the Fund earned 14.6% last fiscal year and 25.9% the year before), contribution rates will decline again. While we read every day about pension costs, the other side of the ledger doesn’t get adequate attention.
Here are the facts:
• For the 2010-11 Fiscal Year, the Fund paid out $8.5 billion in benefits to 385,000 retirees and beneficiaries;
• Over the past twenty years, 83 cents of every benefit dollar paid to retirees has been from investment returns, not employee or employer contributions, a number that’s significantly higher than the national average of 68% for state plans;
• Less than one-half of 1% of all retirees receive a pension exceeding $100,000;
• The average annual State pension, excluding police and fire, is $19,151. 76% of our retirees receive less than $30,000 a year;
• Because they receive secure state pensions, 77% of our retirees continue to live in the state. That means the retirement benefits we pay out continue to be recycled into our state’s economy, constituting an estimated $6.5 billion in spending, $9.5 billion in economic activity, and $1.3 billion in property taxes.
My first priority is always to continue to provide the working men and women of New York State the secure retirements they’ve earned. By continuing to chart the successful course that has sustained us for the last 90 years – investing wisely, paying our bills while also continuously striving to improve our operations and strengthen accountability and transparency, we can ensure that the New York State Common Retirement Fund remains among the best funded in the nation and a model for other states.