New York State Comptroller Thomas DiNapoli said that employer contribution rates for the New York State and Local Retirement System (NYSLRS) will decrease in fiscal year 2018-19 due to recent strong investment returns.
The Comptroller’s Office said the estimated average contribution rate for the Employees’ Retirement System (ERS) will decrease to 14.9% of payroll from 15.3% of payroll. Meanwhile, the estimated average contribution rate for the Police and Fire Retirement System (PFRS) will decrease to 23.5% of payroll from 24.4%.
“We’ve had strong recent investment returns that have helped keep rates stable,” DiNapoli said. “Stable rates are very important to our employers and provide the predictability they need to plan for their future budgets.”
The New York State Common Retirement Fund earned an estimated 11.42% on investments during the fiscal year ending March 31, which easily surpassed its long-term expected rate of return of 7%, and ended the year with an estimated value of $192 billion.
Employer rates are determined based on actuarial assumptions recommended by the retirement system’s actuary and approved by DiNapoli. The Comptroller’s Office said that in 2015, the actuary conducted a review of the systems’ economic and demographic experience for the prior five years. The actuary proposed assumptions and methods for the actuarial valuations, which were adopted by DiNapoli. Based on that report, DiNapoli lowered the assumed rate of return in 2015 from 7.5% to 7%. The median assumed rate of return among public pension funds is 7.52%, according to a February brief issued by the National Association of State Retirement Administrators.
There are more than 3,000 participating employers in ERS and PFRS, and 335 different plan combinations. Payments based on the new rates are due by Feb. 1, 2019, but may be pre-paid by Dec. 15, 2018.