Board Lowers Return Assumption

 

12/08/2021

The Retirement Board at its October 28 meeting lowered NYSTRS’ assumed rate of return on investments from 7.1% to 6.95%, as recommended by the System’s Actuary. The rate was lowered in response to industry forecasts of a decrease in expected future investment returns. Actuarial assumptions like this one are routinely revised in order to align them with more recent experience and expectations.

According to a February 2021 issue brief prepared by the National Association of State Retirement Administrators (NASRA), 78% of public pension plans surveyed reduced their assumed rate of return since fiscal year 2017, all but five plans (96%) have done so since the 2010 fiscal year.

As of June 30, 2021, NYSTRS’ 10-year return, net of fees, was 10.1% and its 30-year return was 9.2%. The System’s estimated funded ratio as of June 30, 2021 is 99% based on an actuarial value of assets and 113% based on a market value of assets. Being fully funded means NYSTRS has the assets necessary to pay all accrued benefits to our nearly 435,000 active and retired members and beneficiaries.

Over the past 30 years, NYSTRS paid out $133.6 billion in benefit payments and expenses while collecting $35.7 billion in member and employer contributions. During the same period, the System’s net assets have grown from $26.5 billion to $148.1 billion, with 86% of NYSTRS’ income generated by investment returns.

Additional actuarial assumptions including, but not limited to, mortality rates, retirement and termination rates, and rates of salary increase, were reviewed and updated to reflect recent member experience. Members are generally living longer and retiring at greater rates. The assumptions will first be utilized in the actuarial valuation as of June 30, 2021, which will determine the Employer Contribution Rate (ECR) that applies to fiscal year 2022-23 member salaries and will be collected by the System in the fall of 2023. See Administrative Bulletin 2021-9 for information on the estimated range for that ECR.

For additional NYSTRS facts and figures, see the Annual Reports and Infographics pages of this website. Also see our Pension Education Toolkit.

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