New York’s Pension Rates Decline for First Time in Five YearsFreeman Klopott
The rate New York state and its local governments pay to the $160.4 billion pension fund will drop for the first time in five years, Comptroller Thomas DiNapoli said.
DiNapoli, the sole trustee of the plan, sets the rates employers pay every year to ensure obligations to retirees can be met. Rates paid by government employers outside New York City for the fiscal year that starts April 1 will fall to 20.1 percent of wages from 20.9 percent for most employees, and to 27.6 percent from 28.9 for police and firefighters, according to a statement e-mailed by DiNapoli today.
“The New York State Common Retirement Fund’s strong gains over the last four years have mitigated some of the impact of the financial market collapse of 2008-2009,” DiNapoli said. “Strong investment performance, along with revision in actuarial smoothing, has lowered the employer contribution rate.”
Under a new accounting method, the state assumes the entire fund will get the same annual rate of return, he said. Previously, the pension had separated assets into equities and non-equities when computing the assumed return.
New York’s counties, cities and towns, particularly those upstate, have been struggling to meet rising pension costs since the recession that ended in 2009 sapped them of property taxes. They were further restricted after Democratic Governor Andrew Cuomo pushed through a 2 percent property tax cap in 2011. The lower rates will relieve them of some costs, which have caused firings and credit-rating downgrades.
The fund provides retirement benefits to more than 1 million employees and retirees from state and local governments outside New York City, which has separate retirement plans.