Seesaw Markets Force NYSLRS to Raise Employer Contribution Rates

‘Volatility in investment income translates into volatility in employer contributions,’ according to the chief actuary at the New York State and Local Retirement System.

Investment income volatility has led to an increase in employer contributions rates for the New York State and Local Retirement System for fiscal 2025-26, according to an annual report on the NYSLRS’ actuarial assumptions. While market volatility was the main factor in raising rates, inflation, higher salaries, recent legislative changes and member retirement rates also contributed to the adjustment, according to the NYSLRS.

The NYSLRS is comprised of the Employees’ Retirement System and the Police and Fire Retirement System. The new average employer contribution rates for the ERS will rise to 16.5% of payroll from 15.2%, while the average PFRS employer contribution rate will increase to 33.7% of payroll from 31.2%. According to the NYSLRS, the ERS and PFRS combined include nearly 3,000 participating employers and more than 300 retirement plan combinations.

“Despite global tensions and market volatility, our state’s pension fund remains one of the strongest and best funded in the nation,” New York State Comptroller Thomas DiNapoli said in a statement. “These rates—in addition to our prudent management and long-term strategy—will help ensure public employees and their families receive the benefits that they have earned.”

According to the NYSLRS, employer contribution rates are determined based on investment performance and on actuarial assumptions recommended by NYSLRS Chief Actuary Aaron Schottin Young, who is required to review the actuarial assumptions and put out a report annually. The recommendations are then reviewed by the system’s independent actuarial advisory committee and then approved by DiNapoli.

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According to the report, which details the actuarial assumptions recommendations, “volatility in investment income translates into volatility in employer contributions.” Because employee contributions are set by law, they are predictable each year, per the report, which added that, “as a result, any volatility in investment income is countered by a change in future employer contributions.”

DiNapoli also said that the New York State Common Retirement Fund’s long-term assumed rate of return will remain unchanged at 5.9%, adding that that the low assumed rate of return helps the pension fund withstand the volatile markets. He noted that this was lower than the median investment return assumption for public pension of 7% and added that the NYSLRS had a funded ratio of 93.2% as of March 31. [source]

The new rates take effect February 1, 2026; however, employers will receive a discount if they make their payment by December 15, 2025.