The value of New York’s pension funds declined during the year ended March 31 due to stock market losses. As such, it will likely lead to tax increases as state and local governments replenish the funds.
State Comptroller Thomas P. DiNapoli, the sole trustee of the Common Retirement Fund, said the return on investment was minus 4.14% and the fund is now valued at $248.5 billion. Valuation for the year ended March 31, 2022 was $272.1 billion.
Still, DiNapoli (D, Great Neck Plaza) said a negative return on investment wouldn’t jeopardize the benefits owed to 1.2 million civil servants, retirees and their beneficiaries. rice field. “I feel safe because my pension is guaranteed,” he said.
Investment losses were the largest since the Great Recession in 2009, when the company lost 26.4%, according to records. The fund has a long-term return target of 5.9%.
The 2022 return was 9.51%. In 2021 he is 33.55% and in 2020 -2.68%.
Last year, pension funds issued checks totaling $15.4 billion to about 515,000 retirees and their beneficiaries in New York and elsewhere. More than 64,800 people on Long Island received a total of $2.5 billion.
The Common Retirement Fund is one of the largest of its kind, along with California and New York City funds.
“The last few months have been challenging for investors,” said Dinapoli, adding that more than 44% of the fund’s assets are invested in volatile stock markets.
The fund’s U.S. stock portfolio fell 8.29% in value from a year earlier, compared with the Russell 3000 Index, the nation’s largest public company, which fell 8.58%. International stock portfolios fell 4.85%.
The impact on employer contributions by state and local governments will be known in the coming weeks. The new contribution rate is usually announced in early September and could trigger an increase in property taxes.
In 2021, Nisekoog village will raise taxes for the first time in four years due to factors such as raising the pension contribution rate for village employees.
For the year ending March 31, 2024, the tax rate increased from 11.6% to 13.1% on Employee Retirement Plan salaries and from 27% to 27.8% on Police and Fire Retirement Plan salaries.
DiNapoli said investment gains and losses are just one factor in determining the contribution rate. Others include wage growth, inflation, retirement age and mortality. The state constitution requires pension funds to be fully funded at all times.
Still, EJ McMahon, a senior fellow at the Empire Public Policy Center, a conservative think tank in Albany, said last year’s negative investment returns “could lead to increased employer contributions by taxpayers from 2024 onwards.” is high,” he said.
He said the annual contribution rate is no longer based on the fund’s five-year earnings, which reduces the impact of one bad year. The fund “has averaged a rate of return of only 5% over the past two years, so it’s almost certain that employer contributions will increase at least slightly next year.”
“If the return on investment doesn’t meet its target, there will be some upward pressure on interest rates,” said Matthew Sweeney, spokesman for DiNapoli. A decision will be made towards the end of the .