New York City’s five pensions beat their investment targets in the past fiscal year, promising to save the city hundreds of millions of dollars in retirement contributions as they profit from resilient stock markets.
The funds for police officers, firefighters, teachers, civil employees and school personnel returned 10.3% in the year through June, beating their 7% target, according to a news release Wednesday from city Comptroller Brad Lander. The pensions — which together have $295 billion in assets — have exceed their actuarial target for over the last 10 years, earning 7.7%.
The gains are expected to ease pressure on New York’s budget. Lander estimates it will shave approximately $2.2 billion off the amount the city will need to contribute to the retirement plans over the next five years.
“Despite market volatility due in part to conflicting messages on monetary policy and tariffs, we are delivering solid performance that will safeguard the pensions of thousands of hardworking public servants,” Lander said in a news release.
The pensions benefited from the steep jump in stock prices, driven by the “Magnificent Seven” megacap stocks and continued investor exuberance over artificial intelligence. Top performers for the pensions were foreign developed-market stocks, returning 16.2%, followed by US equities at 14.7%.
Stocks make up about 43% of the pensions’ assets, public fixed income with around 32% and the remainder in private market alternatives and cash, according to the release.
While the city’s retirement funds have boosted their allocation to illiquid investments like private equity, they didn’t prove as fruitful last year.
Private real estate and private equity funds were the pensions’ worst performers, returning 1.9% and 4.5%, respectively. The alternative-investment group also includes hedge funds, private credit and infrastructure. The city funds are increasing their allocations to alternatives to as much as 32%.
New York’s returns lagged the 11.6% gain of the $556 billion California Public Employees’ Retirement System, but beat the 8.6% return of California State Teachers’ Retirement System’s $368 billion pension. The funds’ also outperformed the 7.7% return of a portfolio made up of 60% global stocks and 40% US bonds, according to investment consultant Wilshire.
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