ALBANY, N.Y. (AP) — New York state Comptroller Thomas DiNapoli has unexpectedly lowered the employer contributions to the pension system made by governments, school districts and their taxpayers, which have all been slammed by years of pension cost increases.
The surprise move for the 2014-15 fiscal year will be a welcome break for governments and schools that have been bracing for another increase. Those pension costs, along with dwindling populations and tax revenues, are driving some local governments toward insolvency, although none has declared bankruptcy as have some municipalities in other states.
The business group Unshackle Upstate immediately tweeted that the move is “not enough. We need reform measures.” The group has sought much deeper cuts in the pension contributions of governments and school districts to relieve pressure on taxpayers paying some of the nation’s highest property taxes and to help spur the economy.
Acting on a recommendation in the latest five-year analysis by Buck Consultants of New York City and on his actuaries’ advice, DiNapoli lowered the employee contributions by about 1 percentage point, when governments feared they would have increased by that much or more. The government and school cost of the pension is about 20 percent of payroll. The state pension covers workers in state government and most local governments and schools outside New York City.
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The reduction will be about eight-tenths of 1 percentage point for those workers, and 1.3 percent for the state’s Police and Fire Retirement System, a separate pension system.
The data from the latest five-year review as well as recent gains in Wall Street investments that recovered losses from the recession make the reduction possible, DiNapoli told The Associated Press.
“Strong gains over the last four years have mitigated some of the impact of the financial market collapse of 2008-2009,” he said. “Strong investment performance, along with a revision in actuarial smoothing, has lowered the contribution rate.”