The Numbers Tell It All: NYSTRS Pension Fund is Secure


"How can you tell us not to worry about our pension when the economic news is so bad?"

That was the reaction we received from some members in response to newsletter articles, web headlines and other System communications issued recently attempting to reassure them their NYSTRS benefits are secure. Based on what members see and hear in the media, the encouraging words seem strange.

Despite all the negative economic news, the fact is NYSTRS retired member benefits are safe and secure. Some facts to consider:

  • The present value of all future benefits payable to retired members of this System is approximately $50 billion. This total is substantially less than the approximately $70 billion in total assets held by the Retirement System.
  • The Retirement System's funded ratio was 106.6% as of June 30, 2008, the most recent figure available. While the ratio as of June 30, 2009, will decrease, the System will remain extremely well funded. According to the National Association of State Retirement Administrators (NASRA), we are one of the best funded retirement systems in the nation.
  • The funds needed to meet our retirement payroll are readily available from interest and dividends earned on our holdings, as well as easily converted liquid assets such as U.S. treasuries, government-backed bonds and high-quality securities with short-term maturities. Currently, we need only a portion of the monies available to us in these highly liquid assets and cash equivalents to meet our payroll.
  • Every month, staff reviews cash flow needs for the next 12 months to ensure there is sufficient funding in each of those months to pay promised benefits. If necessary, asset allocation adjustments are made to meet this monthly payroll.

Despite the facts, some are quick to say, "Yes, but you have lost billions of dollars in recent months. Why are you not talking about that?"

It is true the assets of the Retirement System have declined substantially during this significant market downturn. Specifically, our total net assets decreased from $95.8 billion as of June 30, 2008, to $68.3 billion as of March 31, 2009.

We emphasize again, however, that our funded ratio was 106.6% as of our most recent valuation — meaning actuarially there were sufficient assets to pay all promised benefits owed to retirees and their beneficiaries, as well as the accrued benefits of active members.

Ultimately, it will be necessary to increase the Employer Contribution Rate — a percentage of payroll charged to employers annually in order to properly fund the Retirement System — to ensure we will be able to fund the benefits accruing for our active members. However, because most of these liabilities will not come due for many years to come, there will be sufficient time to adequately fund these future obligations.

As has always been the case, we invest assets in the most prudent manner possible in order to achieve optimum long-term returns with an appropriate level of risk. It is exactly this long-term investment approach that helps us tolerate the volatility of the capital markets we are currently experiencing.

So we reiterate: Although the news about the state of our economy can be sobering, please know that your Teachers' Retirement System pension remains safe.

This article appeared in the Spring/Summer 2009 edition of Your Source and the Summer 2009 edition of Resource.

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