ALBANY — The independent Pew Charitable Trusts public policy foundation on Thursday ranked New York’s pension system as the third best funded retirement system among states.
The ranking based on 2015 data put South Dakota and Wisconsin at the top, while North Carolina and Tennessee trailed New York’s system, which is directed by state Comptroller Thomas DiNapoli.
Overall, the Pew report warns that the gap between the total assets reported by state pension systems nationwide and the benefits promised to retirees reached $1.1 trillion in 2015, which is the most recent year with complete data. That’s 17 percent greater than 2014. The biggest reason for the nationwide gap is that investments didn’t return revenue to the pension fund as anticipated.
The foundation said New York’s pension is funded at 98.1 percent of its obligations. South Dakota was funded at 104.1 percent of its obligations and Wisconsin was funded at 98.3 percent. By comparison, New Jersey and Kentucky had funds to cover just 37 percent of their obligations.
“The fund has enjoyed strong performance since the Great Recession,” said Matthew Sweeney, spokesman for DiNapoli, a Great Neck Plaza Democrat. “It stands at a record value and is on track for another strong year.”
The fund was valued at $186 billion in December.
E.J. McMahon of the independent Empire Center, a fiscally conservative think tank, said the data from 2015 is outdated and of limited use now after a volatile two years in the markets. He also said the “funded ratio” on which the ranking is based is a widely criticized measure in the private sector.
“So while New York is well-funded compared to other state systems, it is not well-funded by real-world, private-sector standards,” McMahon said. “The pension funds continue to represent a very real financial risk to taxpayers, who provide the ultimate constitutional guarantee of pension benefits for hundreds of thousands of state and local government workers.”
If the pension fund fails to meet what McMahon considers overly optimistic investment projections or costs of paying out benefits outstrips revenue, state and local governments could be forced to pay more into the system and that has, in the past, driven up taxes.