Most of New York’s local governments will pay less for their employees’ retirement benefits next year, despite the state pension fund anticipating a lower return rate on its investments.
Municipalities and the state next year will contribute an average of 15.5 percent of their payroll to the $182.5 billion pension fund, which manages retirement benefits for more than 1 million government employees. That’s a 15 percent drop from the current fiscal year’s average rate of 18.2 percent.
For police and fire departments, the contribution rate will see a 2 percent dip, from the current 24.7 percent to 24.3 percent next fiscal year.
State Comptroller Thomas DiNapoli announced the contribution rates Friday, a day after he told Gannett’s Albany Bureau he would drop the pension fund’s anticipated rate of return from 7.5 percent to 7 percent.
Even with the fund anticipating a smaller return on its investments, DiNapoli said the contribution rate will still drop for the third-consecutive year after several years of recession-spurred hikes.
“For the third year in a row, there will be a decline in pension contribution rates as a result of solid investment returns,” DiNapoli said.
The state’s Common Retirement Fund includes the state and local governments, as well as many police and fire units across New York. The state’s school districts are part of a separate pension fund, as is New York City.
The new rates will go into effect with the state’s 2016-17 fiscal year, which will begin April 1. Local governments have until February each year to pay their pension bill.
The move drew a positive response from municipal groups, while a fiscal watchdog gave it a mixed review.
The state Conference of Mayors said the decreasing contribution rate is welcome news, but that it won’t cure the woes of local governments who have long complained about the high cost of state mandates.
“While it’s not a panacea to local financial challenges, it certainly is good news,” said Peter Baynes, executive director of the group, which represents the state’s cities and villages.”
E.J. McMahon, president of the Empire Center, a fiscally conservative think tank, questioned why DiNapoli didn’t drop the anticipated rate of return lower.
“He could have and should have,” McMahon said. “It’s a classic step in the right direction that’s not nearly far enough.”
© 2015 Gannett News Service