NY Comptroller DiNapoli Talks About Monday’s Market Plunge, What It Means for NY Pensions

New York State Comptroller Tom DiNapoli took to the radio on Monday night to talk about the day’s stock market plunge, and what – if anything – it means for the state’s pension funds, which collectively invest about one-third of assets in stocks.

From Capital New York:

During his interview, DiNapoli emphasized that a short-range blip would not have a major impact on the fund’s performance. The fund’s expected average rate of return (or discount rate) is 7.5 percent, and a five-year average of its performance is inversely correlated with the amount of money state and municipal governments are required to kick in to meet the obligations of pensioners.

“The fact that today and this week has been bad, it really is not an issue of our calculation in terms of the rate. Why? Because we value the fund on March 31st,” DiNapoli said, noting contribution rates will be released in the next several weeks. “Like all investors, we don’t like when the market goes down. But we’re not necessarily in a position where we’ve got to have an immediate reaction to it, because we’re going to be in business for a long time.”

[…]

“It’s going to be a long day. Obviously it’s going to be a long week. There are a lot of issues at play out there,” DiNapoli told Susan Arbetter of WCNY’s “The Capitol Pressroom.”

The comptroller mentioned uncertainty about the Federal Reserve Bank’s plans to increase baseline interest rates as well as lagging growth in China and the resulting tumble in its stock market as well.

“We’ve had a strong market for a long time — longer than we’ve seen for many years. It was due for a correction,” DiNapoli said. “Let’s just hope it will be a correction and not something of a more sustained, negative, drag on the market.”

DiNapoli is the trustee of the New York Common Retirement Fund, which operates a $185 billion portfolio. Thirty-seven percent of its assets are allocated towards domestic equities.

Photo by Tim (Timothy) Pearce via Flickr CC License