The largest public pension plans in New York — among the biggest in the country — take different approaches to setting assumed rates of return, with each producing a different result and each having a different person or persons setting the rate.
At the New York State Common Retirement Fund, Albany, state Comptroller Thomas P. DiNapoli, the sole trustee, has the final word after consulting with internal and external experts. The $242.3 billion pension fund set an assumed rate of return of 5.9% that took effect April 1, 2021, down from 6.8%.
For the New York State Teachers' Retirement System, Albany, the 10-member governing board signs off on an assumed rate of return after consulting with internal and external experts and actuaries. The $129.6 billion fund announced in December 2021 a reduction to 6.95% from 7.1%.
At the New York City Retirement Systems, city Comptroller Brad Lander, the fiduciary to the five pension funds within the $248.2 billion pension system, is basically a bystander for rate-setting. Any change in the assumed rate of return must be approved by the state legislature and signed by the governor.
The current assumed rate of return of 7% is the same for each of the five pension funds in the city system. The combined funded ratio for the five pension funds in the city system is 80%, and individual fund ratios range from 69% to 96% on a market value of assets basis.
Changing or keeping the rate is based on a recommendation by the office of the city actuary, a city agency separate from the comptroller's and mayor's offices.
Chief Actuary Marek Tyszkiewicz has recommended that the pension funds keep the 7% rate assumption for two more fiscal years starting July 1. If the legislature delays acting, the existing rate remains in force.
In an email, Mr. Tyszkiewicz explained that his recommendation is based on historical returns and surveys of comparable pension systems.
It also is based on an evaluation by the city comptroller's actuarial auditor as well as surveys of long-term expected returns by each of the five pension funds' investment consultants, he wrote.
Mr. Tyszkiewicz said that the trustees of each of the five city pension funds have endorsed his recommendation, which has been sent to the city law department in the mayor's office to draft the necessary legislation.
"Interaction with the legislature about assumed rate of return legislation is traditionally done by the mayor's Office of Intergovernmental Affairs," Mr. Tyszkiewicz wrote. A representative for Mayor Eric Adams did not return requests for comment. It could not be determined if the office has prepared legislation.
Mr. Tyszkiewicz added that an actuarial audit is conducted for the comptroller's office every two years, and the next one is due March 2025. If the two-year extension of the 7% assumed rate remains through June 30, 2025, his office can "re-evaluate the assumptions once the report is issued."