The New York State Retirement Fund, which oversees more than $184 billion in assets held in trust for most of the Empire State’s non-teaching public employees, is managed by a sole fiduciary: a partisan elected official, currently Democrat Thomas DiNapoli, a former legislator who lacked meaningful financial experience before assuming his role.
NY's pension woes are hardly unique. Since 2000, America’s public pensions funds, in the aggregate, have gone from fully funded to 74% funded.
Last month, the fund announced that it would fall short of its 7% return target for the fiscal year ending March 31. That inevitably means higher costs for already-strained municipalities around the state.
New York’s pension woes are hardly unique. Since 2000, America’s public pensions funds, in the aggregate, have gone from fully funded to 74% funded — and that’s crediting the pension funds’ own unrealistic rate-of-return assumptions. In 2014, 63% of plans were less than 80% funded (the level deemed “at risk” for private-employer pension plans under federal law), and 20% were less than 40% funded. Nationwide, the unfunded liabilities of state and municipal pensions total $1 trillion.
Unaddressed, this pension hole threatens to crowd out necessary state and local funding on education, health and infrastructure. In 2014, for example, California Gov. Jerry Brown signed legislation that will require school districts to increase funding for teachers’ pensions from less than $1 billion in the last school year to $3.7 billion by 2021.
A big reason why pension funds have gotten into this mess is that they lack adequate governance...
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