Governments to pay more into Common Retirement Fund
ALBANY - Starting in 2011, state and local governments must pay in more money to the Common Retirement Fund to make up for a 26-percent drop in value, comptroller Thomas DiNapoli said Thursday.
DiNapoli, sole trustee of the pension fund that covers more than one million government workers, announced the first increase in contribution rates in five years. The move was necessitated by the recession and last year's stock market collapse, which ravaged the fund's portfolio, he said.
Contribution rates will average 11.9 percent in February 2011 for the Employees' Retirement System, up from 7.4 percent next year. The rate will be 18.2 percent for the Police and Fire Retirement System, up from 15.1 percent in 2010.
The two systems, together called the Common Retirement Fund, had a combined value of $116.5 billion in June, down from a high of $154.5 billion in March 2007. However, the fund has rebounded from March when it stood at $109.9 billion.
"When you have a market loss as high as we had last year that's obviously going to have an impact on our rates . . . pensions must be funded, the bills have to be paid," DiNapoli said.
Asked if the spike in contributions would be short-lived, he said, "the negative year of '08 is going to be with us for a period of time and will be factored into our [contribution] calculation . . . There will be continued pressure for the future beyond 2011."
Local governments reacted with alarm, warning property taxes would likely rise. Nassau and Suffolk officials estimated the pension costs for each county government would climb between $25 million and $30 million.
"We've already cut to the bone," said Thomas W. Stokes, deputy county executive for budget and finance in Nassau. "I don't know where else we turn outside of raising some kind of revenue."
Suffolk Executive Steve Levy added, "This increase will come at the worst possible time, as it will be the same time [federal] stimulus funds dry up."