ALBANY — State Comptroller Thomas DiNapoli said Thursday that local governments and their taxpayers won’t be hit with any increase in pension costs for most employees through March 2021, although governments will have to pay slightly more into the smaller pension funds serving most police and firefighters statewide.
Increases in pension costs have in some past years spiked local property taxes. The employer cost for public pensions is a major driver of state and local budgets.
Holding costs essentially flat comes despite volatility in the stock market that is making returns on stock investments hard to predict. DiNapoli said that volatility prompted him to reduce the projected long-term investment return to 6.8 percent from 7 percent.
The state and local governments will continue to pay 14.6 percent of payroll to the pension that serves most public workers. The government employers’ rate to cover police and firefighter pensions outside New York City will be 24.4 percent of payroll, up from 23.5 percent of payroll.
“The long-term outlook for investors is changing and requires a more conservative approach,” said DiNapoli, a Great Neck Plaza Democrat. He is the sole trustee of the massive state pension fund. “As in years past, we’re taking the responsible action of lowering our assumed rate of return now so we can better weather market volatility.”
Last week, Newsday reported that the pension fund grew by 3.38 percent for the three months ending June 30, outpacing a national measure of 3.27 percent for similar funds during a volatile investment period on Wall Street.
The pension's estimated return for 12 months ending June 30 is 7.15 percent. That compares with a 6.47 percent gain in a national index for the same period, according to the Wilshire Trust Universe Comparison Service, which monitors major investment funds nationwide.
Since 2012, DiNapoli has announced two-year projections of employer costs as a way to better allow governments to anticipate and budget for increases.
The $210.5 billion state pension fund serves more than 1 million government workers and retirees.