|NYS Comptroller Tom DiNapoli says public employers will need |
to contribute more to pensions in the very near future. Tom
is seen here with CSEA members in October of 2010.
photo: Courtney Brunelle
Here are some facts. The average contribution rate to the state pension fund for public workers will rise from 16.3 percent of salaries to 18.9 percent. The average for the police and fire retirement system will rise from 21.6 percent to 25.8 percent.
DiNapoli says the pension fund, worth an estimated $146.5 billion on March 31, is still absorbing market losses from the national downturn two years ago despite subsequent gains.
Municipalities could pass some of the higher pension costs on to property taxpayers because the state's new property tax cap has an exclusion for part of the pension hikes.
DiNapoli has repeatedly said public pension funds work well. New York has reduced pension benefits in the past year for newly hired workers and lowered its performance outlook to 7.5 percent, while most states remain at 8 percent.
"This is a fund that has worked and been able to pay out benefits for 90 years," DiNapoli said. Managers also note the "funding ratio," which is the percentage of the fund needed to pay out all its obligations, is more than 80 percent in many states, which pension managers say is positive.
“To be honest with you, if we were talking in the third week of March, I’d be really concerned,” DiNapoli said. “But we have plenty of time for the markets to recover and one hopes that they will. To sum it up: I’m still optimistic about where we are right now,” he added.
Editor's note: This development underscores the argument that we need stronger and more substantial Wall Street regulation and tax code enforcement. While Main Street has taken the biggest hit, Wall Street's major players keep doling out exorbitant bonuses while working families struggle to put food on the table.
|photo: Ove Overmyer|
In the final analysis, the finger-pointing will be directed at public employees for the cause of the short-term greater employer contributions while most sane economists know that there are many parameters that have produced this latest result-- and blaming the recipients of the fund is a ridiculous notion. NYS taxpayers may not know, but should be made aware of, the fact that public employers contributed nothing to the pension funds during the boom years of the Clinton administration.
Investing in the stock market is a long term endeavor, and we are very patient investors. Pension funds have a long story arc because we have a perpetual investment horizon in front of us. However, this won't stop the wild-eyed anti-pension bloodhounds from barking up the wrong tree.