New York’s pension fund’s rate of return improved significantly in the fiscal year that ended March 31 but didn’t erase the previous year’s steep loses, state Comptroller Thomas DiNapoli said yesterday.

The New York State Common Retirement Fund posted a 25.9% rate of return and grew to $132.6 billion from $109.9 billion in the previous year, according to a preliminary estimate. This time last year, DiNapoli reported a 26.3% drop in the rate of return and a $44 billion drop in the fund’s value as compared to end of fiscal 2008.

“Our state pension fund has come through one of the toughest recessions in modern times, and remains one of the strongest in the United States,” DiNapoli said in a conference call with reporters. “We bounced back and posted our third-best performance to date.”

The better performance means government employers who pay into the system could get some relief in the level of contribution — expressed as a percentage of payroll — they are required to make when the rates are calculated and released in September. Last year, the rate local government employers had to pay in 2010 was raised to 11.9% of an employee’s salary from 7.4% in 2009. Police and fire pension rates are calculated separately.

The improved performance does not mean rates will go down right away because contribution levels are phased in over time.

“My expectation is there will be continued pressure on the rates in an upward direction,” DiNapoli said. “We’re not back to where we were before the downturn, and we still will carry last year’s performance for a number of years. One year doesn’t erase the negative year we had last year.”

Standard & Poor’s analyst Robin Prunty said that after a lag, the better returns should have a positive impact on the state and local governments pension costs.

“Down the road, that should mitigate some of the contribution pressure,” she said.

The funds’ best returns were in its domestic and international public equities. Those portfolios posted one-year returns of 51.7% and 51.75%, respectively, while the real estate portfolio posted a negative 27.8% rate of return.

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