Preliminary estimates from the New York City Comptroller’s Office indicate that the pension investments for the $195 billion New York City Retirement Systems earned 8.7% in fiscal year 2018.
The returns eclipsed the systems’ actuarial interest rate assumption of 7%, but were below last year’s returns of 12.95%. The average annual rate of return since 2014 is now 7.2%.
The comptroller’s office said the excess earnings above the actuarial interest rate assumption will be phased in over six years beginning in fiscal year 2020. It said this is expected to bring in savings of $54 million in fiscal year 2020, $108 million in fiscal year 2021, and $162 million in fiscal year 2022.
The pensions accounted for $9.74 billion, or 11%, of the city’s overall $89.16 billion budget for fiscal year 2019. That amount will rise at a gradual rate of 1.7% per year to $10.26 billion for fiscal year 2022.
According to the analysis of the 2019 budget from Comptroller Scott Stringer, there are no planned pension contributions for fiscal year 2019, however, there will be $54 million worth of contributions in 2020, which doubles to $108 million in 2021, and increases to $162 million for fiscal year 2022.
As of May, the asset allocation for the New York City Retirement Systems’ investments was 29% in US equity, 28% in fixed income, 12% in world ex-USA, 9% in alternative credit, 8% in emerging markets, 6% in private equity, 4% in private real estate, 1% in hedge funds, 1% in REIT, 1% in infrastructure, 1% in international fund of funds, and the remainder in cash and global equities.
These five pension funds comprising the New York City Retirement Systems are the New York City Employees’ Retirement System, the Teachers’ Retirement System of the City of New York, the New York City Police Pension Fund, the New York City Fire Pension Fund, and the New York City Board of Education Retirement System.