Your NYSTRS Benefits are Safe

(Nov. 7, 2008) – 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 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 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 (including the dividends and interest earned) 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 adjusted 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 (from $30 billion in 1990 to $96 billion in 2008), achieving double digit returns in the majority of those years. Just as importantly, we are well positioned to make gains as the economy rebounds.

The bottom line: NYSTRS has the liquidity needed to pay promised benefits in the near term, and the accumulated assets that will allow it 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.

For more information on how public pension plans like NYSTRS are weathering the current market downturn, read the NASRA/NCTR Issue Brief: Market Declines and Public Pensions, published by the National Association of State Retirement Administrators and the National Council on Teacher Retirement.

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