NY Cuts Pension Contributions

There’s an exception to every rule, and New York maybe the one for US public pensions.

(August 28, 2013) — As many public pension systems around the US struggle with cavernous deficits in their funding levels, one has taken the decision to cut contributions due from its employers.

New York State Comptroller Thomas DiNapoli has lowered the payments due from governments, school districts, and local taxpayers that fill up the public pension pot for the next fiscal year.

“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 a revision in actuarial smoothing, has lowered the employer contribution rate for 2014-15.”

The average contribution rate for the Employee Retirement System will decrease by 0.8% of payroll, to 20.1%. The average contribution rate for the Police and Fire Retirement System will decrease by 1.3% of payroll, to 27.6%.

DiNapoli’s office said the retirement system’s actuary recommended a change based on a recommendation from Buck Consultants, as part of an independent actuarial review which is performed every five years. The previous method separated assets into equities and non-equities, while the new method expects the entire fund to earn the assumed rate of return and smoothes any unexpected gains or losses.

Projections of required contributions will vary by employer, DiNapoli’s office said, depending on factors such as retirement plans, salaries, and the distribution of their employees among the six retirement tiers.

Earlier this month, the US Census showed contributions to state retirement systems from employees and employers topped $111 billion, but total pension fund assets fell 1% to $2.5 trillion in fiscal 2012, well below 2007 levels when fund assets reached $2.8 trillion.

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