NEW YORK Aug 27 New York state has lowered the
amount it requires public employers to pay into the pension
system as cash-strapped municipalities struggle with retirement
costs that sky-rocketed after the financial crisis wiped out
pension fund assets.
The decrease in the 2014-2015 rates announced by the New
York state Comptroller's office, which acts as the fund's
trustee, follows new rules introduced earlier this year that
allow public employers to defer more pension payments into the
Public employers pay into a defined benefit pension plan,
where contributions are worked out based on current assets,
expected returns and projected future liabilities. The crash in
asset values during the 2008-2009 financial crisis meant
contribution rates soared.
The new rates cut contributions to the Employee Retirement
System (ERS) by 0.8 percent to 20.1 percent of the overall
payroll. The contribution rate for the Police and Fire
Retirement System (PFRS) will decrease by 1.3 percent to 27.6
percent of the wage bill.
The Comptroller's office said that the lowered rates
resulted from a combination of strong investment gains since the
financial crisis and new accounting methods that change the way
the funds account for short-term fluctuations in asset prices.
"Strong investment performance, along with a revision in
actuarial smoothing, has lowered the employer contribution
rate," New York's state comptroller, Thomas DiNapoli, said in a
The Comptroller's office did not specify how much of the
decline was due to the accounting changes and whether rates
would have risen under the previous accounting methods. A
spokesman for the Comptroller's office said, however, that the
effect of the new accounting methods was "significant."
Although only a modest decline, the new rates mean some
extra relief for municipalities that had been banking on a
increase in the coming fiscal year. The decrease is the first
time contribution rates have fallen in the last five years.
Many municipalities have complained that the stiff rise in
contribution rates have been eating away at their budgets. In
2000, at the height of the tech bubble, the contribution rate
for the ERS was just 0.9 percent, and 1.9 percent for the PFRS.