New York State Common lowers assumed rate to 5.9%

New York State Common Retirement Fund, Albany, cut its assumed rate of return on investments to 5.9% from 6.8%, Thomas DiNapoli, the state's comptroller and sole trustee of the $268.3 billion fund, announced Wednesday.

The reduction took effect April 1 the start of the pension fund's current fiscal year.

The reduction was based on a recommendation from Michael R. Dutcher, the pension system's actuary, in an annual report on actuarial assumptions released by the comptroller's office in conjunction with the news release describing the reduced rate of return.

"The intent is to set realistic return assumptions that result in stable contribution rates at a sufficient and sustainable level for employers," Tania Lopez, a spokeswoman for Mr. DiNapoli, said in an email.

The goal also is "ensuring the (Common Retirement) Fund remains well-funded and has the assets needed to provide retirement security for our 1.1 million working and retired members and their beneficiaries," she added.

The Common Retirement Fund is 99.3% funded, according to Mr. DiNapoli in the release.

The reduction gives New York the second lowest assumed rate of return among 131 public pension plans tracked by the National Association of State Retirement Administrators.

According to a NASRA survey published this month, only the Kentucky Employees Retirement System (Non-hazardous), Frankfort, had a lower rate at 5.25%. It accounts for 90% of the liabilities in the Employees Retirement System, the NASRA report said. The Kentucky Employees Retirement System (hazardous) represents the other 10%.

The NASRA report said the median assumed rate of return among the public plans was 7% and the average rate of return was 7.06%. Nineteen public plans in NASRA's data base had assumed rates of returns less than 6.75%.

Since 2010, Mr. DiNapoli has reduced the assumed rate of return four times — from 8% in 2010, to 7.5% in 2015, to 6.8% in 2019 and to 5.9% Wednesday.