Comptroller says state retirement fund employer contribution rates will increase in 2012
Last Updated: 11:50 AM, September 2, 2010
Posted: 11:49 AM, September 2, 2010
ALBANY -- With the economy continuing to show signs of weakness, State Comptroller Tom DiNapoli announced today increases over the previous year in the 2011-12 employer contribution rates for the state's retirement fund.
DiNapoli also said his office had accepted the Retirement System actuary’s recommendations for the assumptions used in calculating employer contribution rates.
“Unfortunately, it takes the economy a lot longer to climb out of a hole than it takes to fall in it,” he said. “The markets are still recovering from the 2008-09 financial meltdown, and that recovery continues to be volatile. We handled the meltdown better than most pension funds, but we’re still feeling the impact, and, as I have consistently cautioned, the employer contribution rates I’m announcing today will reflect the impact of the financial crisis.”
The average contribution rate for the Employee Retirement System will increase from 11.9 percent of salaries to 16.3 percent. The average contribution for the Police and Fire Retirement System is increasing from 18.2 percent 21.6 percent.
“By law we are required to review our assumptions every five years, including the assumption for the investment rate of return on the Pension Fund’s investments,” DiNapoli added.
The rate has been locked at 8 percent since 2000, and DiNapoli's office had as late as June defended it as "the industry standard" despite warnings from budget hawks that the rosy number masked a looming pension crisis.
The comptroller was mulling an internal recommendation and could also peg pension growth at 7.75 percent when he makes a final decision next month, Whalen said.
Either way, the fund's expected rate of return would sink to its lowest level since 1985.