The pension fund for public retirees in New York saw significant investment returns for the previous fiscal year, according to state Comptroller Thomas DiNapoli’s office.

The New York State Common Retirement Fund had an investment return of more than 11.5 percent during the fiscal year ending on March 31, nearly double the long-term expected rate of return of 5.9 percent.

The fund, which manages the money for local and state government retirees, ended the year at nearly $268 billion.

While inflation persists and global tensions pose risks to investors, the fund, thanks to its prudent management and long-term approach, is well positioned to weather any storms and continue to provide retirement security to the public employees it serves,” DiNapoli said in a statement.

DiNapoli’s office said that the fund — which is one of the biggest public pension funds in the nation — has diversified assets, with nearly 43 percent invested in publicly traded equities, 22.2 percent invested in cash, bonds and mortgages and 14.6 percent invested in private equity. Nearly 13 percent was invested in real estate.

Investments in domestic equities saw a nearly 29 percent return on investment and global equities brought back 24.3 percent, while real estate investments saw a 9.7 percent decrease.

The pension fund paid out more than $16 billion during the same time period for retirement and death benefits. In the fiscal year ending in 2023, the fund paid out nearly $15.4 billion in benefit payments.

This year’s significant investment return comes after a 4.1 percent loss during the fiscal year ending in 2023.

E.J. McMahon, founding senior fellow at Empire State Center for Public Policy, a conservative-leaning think tank, said that despite the strong performance of the pension fund, subpar returns during the two prior years mean that the fund still needs to be carefully managed.

McMahon said that due to the large share of investment in the stock market, the pension returns typically follow a similar pattern of gain or loss, though to smaller degrees given the diversification of investments.

Employer contribution rates — which are determined by how well the fund does over a multiyear period, along with other factors including wage growth, inflation and information about pension recipients — are decided by DiNapoli’s office more than a year in advance. McMahon estimates that despite the recent strong performance, the contributions required of employers will not be dropping soon.

Wayne Spence, the president of the Public Employees Federation, celebrated DiNapoli’s management of the pension fund.

“As the sole trustee of the state’s pension plan, Comptroller Tom DiNapoli has demonstrated again and again that proper diversification and maintaining a long-term investment horizon delivers consistent positive results for New Yorkers,” Spence said in a statement. “This year is no different.”

McMahon said that he believes DiNapoli has done a good job keeping the pension fund “well managed,” but criticized the state Legislature and Gov. Kathy Hochul for approving increased retirement benefits this legislative session that are paid out from the fund.

“This fund needs to be carefully and prudently managed. (DiNapoli’s) carefully and prudently managing it,” McMahon said. “But unfortunately, the legislature, with Hochul’s cooperation, is drilling a bigger hole in the bottom of the bucket.”

The 11.5 percent investment return comes after the enacted state budget made changes to increase retirement benefits for some state workers. Under the new law, a Tier 6 employee’s pension will be based on their top three years of earnings instead of five years, a change that union leaders say will increase workers’ retirement security and bring that tier in line with earlier pension tiers.

While unions celebrated their successful push, which they claimed would help address recruitment issues during the ongoing state workforce shortage, McMahon ridiculed the change to Tier 6 as fiscally irresponsible. McMahon said claims that the increase would incentivize people to take public sector jobs were “baloney” that lacked any evidence.

“I defy you to find me a twenty-something that’s out there thinking about their pension,” McMahon said. “We’ve all been in our twenties once, it’s just not something you think about.”

McMahon said that young people that could be recruited to fill job vacancies are likely more concerned with their salary and health benefits until pensions become more important as they near retirement.

PEF leadership, alongside other unions representing public sector employees, said that the changes to Tier 6 would attract and retain staff, saving the state money by reducing the amount spent on overtime, which Spence said is more than $1 billion annually. With incentives bringing in more workers, Spence said, overtime work could be reduced.

“Thanks to these efforts, several sensible reforms have been enacted that are both affordable and sustainable over the long term,” Spence said in a statement. “We remain hopeful that the Comptroller’s steady hand and continued positive economic and market conditions will generate the resources necessary to support further improvements to the Tier 6 plan so the $1 billion spent on staff overtime can be reallocated to other pressing state-operated safety net programs and services.”

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