New York state’s $132.8 billion pension plan is underfunded by $71 billion and annual taxpayer payments to keep it sound may more than double to almost $4 billion during the next five years, a report says.

Increased payments are needed by the third-largest U.S. public pension to recover from a 26 percent decline in assets in the year ended March 31, 2009, and to cover benefits lawmakers increased over the past decade, the Empire Center for Public Policy said.

“The traditional pension system exposes taxpayers to intolerable levels of financial risk and volatility,” said the Albany-based center, a project of the Manhattan Institute, which opposes taxes and promotes outsourcing to private companies and reduced spending.

New York Comptroller Thomas DiNapoli described the fund as strong during his election campaign.

The pension is fully funded, even though the market value of investments is less than needed to pay all benefits because assets “include the current value of all future contributions employers and employees will make,” its annual report says….

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