Tom DiNapoli
New York taxpayers will be hit with a higher bill for state and local employee pensions starting in 2025.
State Comptroller Tom DiNapoli announced employer’s average contribution rates for the New York State and Local Retirement System (NYSLRS) will increase from 13.1% to 15.2% of payroll for the Employees’ Retirement System (ERS) and from 27.8% to 31.2% of payroll for the Police and Fire Retirement System (PFRS).
The State Retirement System is made up of these two systems, which pay retirement and disability benefits to state and local public employees and death benefits to their survivors. There are more than 3,000 participating employers in ERS and PFRS, and more than 300 different retirement plan combinations. Last fiscal year, $15.5 billion were paid out in benefits.
DiNapoli also announced that the State Retirement System had a funded ratio of 90.3% as of March 31, 2023. New York’s retirement system is consistently ranked among the nation’s best funded retirement systems. A high funding ratio means the State Retirement System has the funds available to pay out retirement benefits to its more than 1.2 million members, which includes nearly 700,000 current and former state and local government employees and more than 500,000 retirees and their beneficiaries.
Employer rates for the Retirement System are determined based on investment performance and actuarial assumptions recommended by the system’s actuary, who is required to review the actuarial assumptions and issue an annual report. The recommendations are reviewed by the independent Actuarial Advisory Committee and approved by DiNapoli. In addition to investment performance, other factors that impacted rates included inflation and higher salaries.
The New York State Common Retirement Fund’s long-term assumed rate of return will remain at 5.9%. DiNapoli has been a leader in the trend of public pension funds lowering their assumed rates of return to better enable New York to weather volatile markets. The investment return assumption median for public pension funds was 7% in July 2023, according to the National Association of State Retirement Systems.
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