Expected Rate of Return Lowered


The 10-member Retirement Board approved at its recent quarterly Board meeting the recommendation of NYSTRS’ Actuary to lower the System’s assumed rate of return on investments from 8.0% to 7.5%, effective with the actuarial valuation as of June 30, 2015.

The lower rate was one of several changes to actuarial assumptions recommended by the Actuary and approved by the Board. The changes, which included revised rates of mortality, were considered necessary to account for changing demographics and consensus predictions of future investment returns.

For the fiscal year ended June 30, 2015, NYSTRS’ total return was 5.2% net of fees. The return exceeded the System’s benchmark by nearly 75 basis points and was in line with peer returns for the same period. It marked the sixth consecutive year of positive returns for NYSTRS. In four of those six years returns exceeded double digits, with the five-year rate of return standing at 12.4%.

The System’s market value of assets totaled $109.7 billion at fiscal year-end 2015, the highest in System history. NYSTRS remains well funded with a funded ratio of 111.6% based on market value of assets and 92.9% based on actuarial value of assets.

Other highlights from NYSTRS' Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2015 include:

  • The System's investments experienced appreciation of $3.3 billion.
  • NYSTRS' 20-year annualized net rate of return is currently 8.4% and our 25-year rate of return is 8.9%.
  • Over the past 20 years, NYSTRS has paid out $83.2 billion in benefits while collecting $21.2 billion in employee and employer contributions. During the same period, the System's net assets have grown from $47 billion to $110 billion, with 85% of NYSTRS' income generated by investment returns.
  • NYSTRS administers its defined benefit plan cost effectively. Its investment fees average 24¢ per $100 managed, compared to 60¢ or more in fees associated with 401(k) plans.
  • More than 80% of the $6.5 billion in benefits NYSTRS pays out annually is distributed to New York State residents. Retiree spending creates a ripple effect throughout the economy.
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