You already know the New York State Teachers' Retirement System (NYSTRS) provides a secure pension for public educators in the Empire State. You may also know it is one of the biggest, best-funded and most efficiently managed public pension plans in the nation.
But did you also know the pension benefits paid by NYSTRS are critical to New York's economy? NYSTRS pays out more than $6.3 billion to retirees and beneficiaries annually. Of those funds, 80% are paid to New York residents. When recipients spend those benefits, that money becomes another person's income. Pension spending provides a consistent revenue stream for the local, state and national economies.
Public pensions also lessen the need for taxpayer-funded public assistance programs. According to the National Institute on Retirement Security, pension plans like NYSTRS mean 4.7 million fewer poor and near-poor households nationwide.
And let's not overlook the cost efficiencies NYSTRS is able to obtain. For every $100 it manages, expenses and fees account for only about 25 cents. A 2014 national study found the average cost of managing a mutual fund is 73 cents per $100 managed. Lower fees mean more money for investing, and less money needed in contributions to fund the plan.
Here's another example of NYSTRS' cost efficiency: Between 1994 and 2014, NYSTRS took in $19.3 billion in employer and member contributions. During the same period it paid out about four times as much in benefits; $78.1 billion in all. Despite paying out $52 billion more than it took in, System net assets nearly tripled, growing from $40 billion to over $108 billion.
This is possible because NYSTRS can pool funds and realize cost efficiencies an individual investor cannot match. And by investing money throughout a member's career, the investment income generated keeps costs to school districts and taxpayers down.
In fact investment earnings accounted for 87% of NYSTRS income between 1994 and 2014. Another 2% came from member contributions. In 17 of those 20 years, employer contribution rates were in the single digits.
Providing retired teachers a secure income for life... Managing a plan at a fraction of the cost of a private pension plan... Funding benefits primarily with investment returns... Paying pensions that fuel the economy... That's NYSTRS.