Benefit Payments Not Impacted by Financial Markets

Many of our members — particularly those who are retired — are understandably concerned the recent upheaval in the financial markets jeopardizes their NYSTRS benefits. Those fears are unfounded.

In reality, NYSTRS is one of the best funded public retirement systems in the nation. With assets totaling $88 billion as of 9/30/08, there are sufficient funds on hand to pay promised benefits to all current retirees and to cover the accrued benefits of all active members — even those who may not collect their first payment for another 30 years.

Consider this: Our current retirement payroll is approximately $5 billion. Almost 65% of the monies needed to meet this payroll come from dividends and interest earned on our holdings, as well as employer and member contributions. The remaining $1.8 billion needed to make payroll is readily available from liquid, income-generating assets currently totaling more than $11 billion. Liquid assets include high-quality securities with short-term maturities, as well as U.S. Treasuries and government backed bonds.

Here is how the 10-member Board of Trustees and the System's investment professionals protect the long-term security of the retirement fund:

Advance Funding. By pooling employer and member contributions and investing those assets throughout a member's career, the System is able to achieve returns and economies of scale no individual investor could duplicate. This long-term investment approach allows us to accumulate the assets necessary to provide fully funded benefits in retirement. Also, employer contributions are recalculated annually to ensure the System remains at or near full funding.

Diversified Portfolios. Our investment portfolios are broadly diversified both among and within asset classes. The System's forward-thinking yet conservative approach to investing has allowed us to take advantage of growth opportunities in the market while avoiding investments without a strong track record. This philosophy has served us well in the past, as evidenced by the fact the total portfolio tripled in less than 20 years, achieving double-digit returns in the majority of those years. Just as importantly, the System is well positioned to make gains as the economy rebounds.

The bottom line: NYSTRS has both the liquidity needed to pay promised benefits today and the accumulated assets that will allow it to continue to do so in the future. Despite market volatility, you can rest assured your retirement fund is safe, secure and guaranteed by the New York State Constitution.

This article appeared in theWinter 2008/2009 edition of Resource.

(Read more Headlines.)

Back to Top