About a month ago I wrote about NYCERS's miserable investment performance over the last 13 years in contrast to a simple index(stocks)/core(bonds) strategy. It was so bad that I wondered how the other city pension funds did. So I did a comparable analysis of the performance of TRS and the Police Pension Fund, the two other large systems. You can check the detailed spreadsheets for NYCERS , TRS , and Police with the highligthed links.
TRS and Police did almost as bad as NYCERS as seen in the first table below. The analysis, however, did surface an issue when looking at the three systems together. They had significantly different income flows over the 13 year period. NYCERS & TRS had negative income flows, while Police had a positive income flow.
This positive flow hides the poor investment performance for Police. In contrast, TRS's large negative flow makes its investment performance look worse than it really is.
The last column in the first table shows the new 7% pension liability amount computed by the NYCERS/TRS actuary.
If the investment strategy and the funding (see table 2) were better, NYCERS and TRS would be in great shape, even without the benefit of the new Tier 6 benefit limits. Police has a much deeper problem but upgrading the investment strategy would be a big step forward in getting the problem under control.
| System | Closing Balance | Closing Balance | Income Flow | Closing Balance | Actuarial Liability |
| **** | Actual | Index/Core | 2000-2012 | Zero Income Flow | 2012 |
| Index/Core | (7%) | ||||
| NYCERS | $42.8B | $55.5B | -$4.4B | $63.2B | $62.9B |
| TRS | $32.8B | $41.0B | -$8.8B | $53.5B | $55.1B |
| Police | $25.5B | $31.2B | $4.5B | $26.1B | $38.1B |
| System | Benefits paid | Employer Contributions |
| NYCERS | $38.9B | $15.6B |
| TRS | $41.6B | $18.6B |
| Police | $20.2B | $16.5B |
| System | Retirees | Vested Members | Inactive Members | Active Members |
| **** | 2011 | 2011 | 2011 | 2011 |
| NYCERS | 135,468 | 8,914 | 18,969 | 182,021 |
| TRS | 74,064 | 8,932 | 10,938 | 109,636 |
| Police | 45,755 | 780 | 1,643 | 33,705 |
Note: Since July 1, 2009 Police and Fire pension benefits for new employees have been reduced to Tier 3 levels.
Note: Since April 1, 2012 all NYS pension benefits for new employees have been reduced by Chapter 18 of the Laws of 2012 (Tier 6).
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