Strong investment outcome far outpaces 7% actuarial rate of return, delivering $1.81 billion in savings for New York City
New York City Comptroller Brad Lander announced that the five New York City retirement systems (Systems) achieved a combined net return of 10.0% across all five pension funds for the fiscal year ending June 30, 2024. The Systems – which includes the Teachers’ Retirement System of NYC (Teachers), New York City Employees’ Retirement System (NYCERS), NYC Police Pension Fund (Police), NYC Fire Pension Fund (Fire), and NYC Board of Education Retirement System (BERS) – ended FY 2024 with a value of $274.38 billion in assets, making the Systems collectively the third largest public pension system in the country.
“Despite the economic challenges of the past few years, our strategic investment partnerships and careful portfolio management delivered strong returns for New York City’s pension funds and great savings for the City this year,” said New York City Comptroller Brad Lander. “Our ability to outperform last year’s 8.0% net return reflects the hard work of our talented Bureau of Asset Management team and the resilience and foresight of their investment approach. As the global economy continues to recover post-pandemic, our office is committed to ensuring that the Systems continue to achieve strong returns on their investments and provide retirement security for the hardworking New Yorkers who have served our city.”
“After several years of unprecedented global economic disruption, I’m pleased with the progress of the net returns we achieved as the markets continued their recovery,” said Steven Meier, Chief Investment Officer. “However, as we plan for FY 2025, we must remain prudent and focused on recommending tailored investment opportunities that can ensure strong, consistent returns for years to come. We will work diligently and prudently to support long-term growth.”
Each of the City’s five pension funds are well-funded to guarantee retirement security for their members, and the Comptroller’s Bureau of Asset Management and trustees of each of the Systems remain focused on long-term results, the most important metric for determining a pension fund’s success. The Systems have an annualized average three-year return of 2.8%, five-year return of 7.4%, and seven-year return of 7.5%.
New York City public sector workers are legally guaranteed a defined pension benefit plan. When the funds fail to meet the actuarial target of 7%, the City is required to increase its contributions over the subsequent five years through a formula determined by the City actuary. The strong investment return results in $1.81 billion saved over the next five fiscal years for the City of New York to invest in crucial programs to improve the quality of life for New Yorkers.
For the second consecutive year, public market equities delivered the lion’s share of positive portfolio returns for the pension plans. In the U.S., growth companies and strategies, especially a few tech firms linked to AI, performed exceptionally well. As AI technology advances and its infrastructure expands, the market is anticipating AI to significantly impact various sectors and potentially boost equity prices in the future.
The strong performance this fiscal year is due in large part to the Systems’ diversified asset allocation, portfolio construction, and risk management — with a balance of both public and alternative assets across geographic regions. At the end of FY 2024, the Systems had an allocation of approximately 42% in public equities, 32% in public fixed income, and 26% in alternatives.
More details about the asset allocation and investments for each of the five New York City pension funds is available on the Comptroller’s website (a feature added by Comptroller Lander to significantly increase transparency). Data on the audited pension returns, including asset class returns along with relevant benchmarks, will be included in Quarterly Performance reports in September.
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