NYS retirement fund hits $260B as investment returns improve in Q3

Bonds

The value of the New York State’s common retirement fund was estimated at $259.9 billion at the end of the third quarter of fiscal 2023-24, state comptroller Thomas DiNapoli said Tuesday.

For the three-month period ending Dec. 31, the fund’s investments returned an estimated 6.18%. The fund’s long-term expected rate of return is 5.9%.

In November, DiNapoli said the fund’s estimated value was $246.3 billion and that for the three-month period ending Sept. 30, fund investments returned an estimated negative 1.59%.

“The markets have seen an improvement over the past quarter, but some volatility remains. Economic opinions are mixed about the year ahead and uncertainty persists,” said state Comptroller Thomas DiNapoli.

Bloomberg News

“The markets have seen an improvement over the past quarter, but some volatility remains,” DiNapoli said in a statement. “Economic opinions are mixed about the year ahead and uncertainty persists.”

The fund’s value reflects retirement and death benefits of $4.2 billion paid out during the quarter, the comptroller said. Its audited value was $248.5 billion as of March 31, the end of the state’s last fiscal year.

As of Dec. 31, the fund had 41.84% of its assets invested in publicly traded equities with 22.62% in cash, bonds and mortgages, 14.75% in private equity, 13.30% in real estate and real assets and 7.49% in credit, absolute return strategies and opportunistic alternatives.

DiNapoli initiated quarterly performance reporting in 2009 as part of ongoing efforts to increase accountability and transparency.

The fund is one of the largest public pension funds in the United States. It holds and invests the assets of the retirement system on behalf of more than 1 million state and local government employees and retirees and their beneficiaries.

Nationally, unfunded state pension liabilities total $6.96 trillion, approximately $21,000 for each man, woman and child in the United State, according to a report from the American Legislative Exchange Council.

“As noted in this report last year, the total number of unfunded liabilities is heavily determined by U.S. Treasury note yields, which have fluctuated since 2020,” according to an accompanying article on alec.org written in September by Jonathan Williams, Thomas Savidge, Lee Schalk and Nick Stark.

“State governments are obligated, often by contract and state constitutional law, to make these pension payments regardless of economic conditions,” they wrote. “As pension payments continue to grow, revenue that could have gone towards tax relief or essential services — like public safety and education — is spent paying off liabilities instead.”

ALEC is a nonpartisan organization of state legislators dedicated to the principles of limited government, free markets and federalism.

Additionally, ALEC said, several states face billions of dollars in unfunded other post-employment liabilities (OPEB).

OPEB liabilities total over $1.14 trillion, ALEC said in a separate report, which amounts to about $3,500 for each person in the U.S.

OPEBs covers all benefits a retired public employee is eligible to receive outside of retirement funds, including health and life insurance, supplemental Medicare insurance and other benefits.

“Without real reforms, defined benefit OPEB plans will place a severe burden on taxpayers,” the report asserted. “By offering a range of defined contribution options as well as implicit subsidies by pooling retirees together with active employees, states can keep the promises made to both public employees and taxpayers.”

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