New York State Comptroller Thomas P. DiNapoli
Will Return to 2005 – 2007 Levels
Albany, NY — The New York State Comptroller’s office today announced the employer contribution rates for the Employees’ Retirement System (ERS) and the Police and Fire Retirement System (PFRS) will increase in 2011. The impact of the global recession on the $116.5 billion New York State Common Retirement Fund (Fund) will drive the average ERS rate up to 11.9 percent (up from 7.4 percent in 2010). The average PFRS rate will be 18.2 percent (up from 15.1 percent in 2010).
While employer contribution rates will increase in 2011, the rates are on par with the historical rates of 2005, 2006 and 2007 when rates were 12.9 percent, 11.3 percent and 10.7 percent, respectively for ERS. The rates for the PFRS during the same period were 17.6 percent, 16.3 percent and 17 percent, respectively. In addition, the ERS and PFRS rates remain lower than the rates used by all five of New York City’s pension funds.
“While the pension fund has handled the market collapse better than most other public funds, there is no question that it’s been hit by the crumbling economy,” State Comptroller Thomas P. DiNapoli said. “The Retirement System’s Actuary has determined that employer contribution rates have to increase. In the past, when the market performed well, the rates decreased. Similarly, when the markets perform poorly, the rates have to increase.
“We must give local governments the tools they need to manage through these tough times, and we must enact reforms that will give taxpayers a break. For the short term, I’ve offered a proposal to mitigate the impact of higher contribution rates on state and local governments by allowing employers to amortize a portion of the increased costs over time, which will provide government employers with tens of millions of dollars of budget relief while ensuring the Fund remains strong. I will work with the Governor and the Legislature to address the challenges facing local governments.
“The more difficult challenge is to address the long-term costs. One positive sign is the agreement reached between Governor Paterson, the Civil Service Employees Association and the Public Employees Federation earlier this year. Once this agreement is enacted, it could save state and local governments an estimated 19 percent in future contributions for each new employee. These pension reform discussions need to continue with all parties to help protect taxpayers and the Fund for years to come.”
The Retirement System’s Actuary calculates the rates using a valuation methodology that has been annually approved by the Comptroller’s Actuarial Advisory Committee and was deemed reasonable and appropriate after an independent review by Buck Consultants in 2008. The Comptroller is required by law to certify the rates calculated by the System’s Actuary. The calculation of employer contribution rates involves multi-year projections regarding the Fund’s investment return, employee salary growth, employee retirement or withdrawal rates and other factors.
Despite the Fund’s negative 26.3 percent return for the fiscal year ended March 31, 2009, the Fund remains one of the strongest, most secure public pension plans in the United States.
The Comptroller’s office mailed letters to State and local government employers yesterday, informing them of the contribution rate increase for 2011.