Pension follies continue

by E.J. McMahon |  | NY Torch

Assemblyman Peter Abbate

Assembly Democrats have introduced eight bills to sweeten pensions, the Citizens Budget Commission pointed out yesterday. Here’s a nice CBC chart summarizing those measures. By far the costliest, sponsored by Assemblymen Peter Abbate and William Colton of Brooklyn, would boost the salary “multiplier” used to calculate pensions for employees with more than 30 years service. That would carry a pricetag of $1.1 billion.

The Daily News editorially slammed Assembly Dems for “pitching woo to their labor sweethearts at huge public expense.” But hey — why pick on Abbate, Colton and their colleagues?  They’re only acting in the spirit of the Tier 6 pension “reform” law, which contains three potentially enormous re-openers allowing unions to directly petition the governor (or, in the case of New York City, the mayor) for a partial restoration of benefits curtailed in the new tier. See the bottom half of this March 2012 Torch post for details.

In the heat of the pension debate a year ago, Governor Cuomo himself suggested pension benefits might be enhanced “if the economy gets better.” So you might say that with this year’s crop of pension sweetener bills, unions and their legislative allies are just jumping the gun a bit.

In other pension news:

  • Comptroller Thomas DiNapoli reported that the New York State and Local Retirement System (NYSLRS) had earned 1.74 percent in its third quarter, which ended Dec. 31, on the heels of a first quarter loss of 0.92 percent and a second quarter gain of 4 percent. The S&P 500, a rough proxy for the equities-heavy basket of NYSLRS investments, has gained about 6 percent since Jan. 1, the start of the pension fund’s fourth quarter. So unless Wall Street does a swan dive before March 31, NYSLRS will probably achieve its 7.5 percent earnings target this year — on the heels of a sub-par return of just under 6 percent for all of fiscal 2012.
  • The state Budget Division released forecasts of how the city of Syracuse would fare under the 25-year pension “smoothing” option proposed by Governor Cuomo. This was done in response to an analysis by Gates Supervisor Mark Assini, who had produced his own analysis indicating that Syracuse would actually lose under the deal. But DOB’s numbers only deepened the mystery surrounding the assumptions behind Cuomo’s proposal. If the pension fund achieves its earnings target, the “smoothing” will pay for itself after just 20 years, according to a Syracuse Post Standard account of the DOB forecast. On the other hand, a DOB spokesman acknowledged that if the fund earns 6.7 percent–which is more likely–it will take more than 25 years for the governor for the costs and benefits to even out.

- E.J. McMahon is the President at the Empire Center for Public Policy.