pension contribution rates

Contribution Rates Down In Wake of New York Pension Fund’s “Solid” Investment Returns

Employers who pay into the New York State and Local Retirement System will soon find their pension contribution bills to be significantly smaller. The System has lowered the contribution rates required of state and local government entities, as reported by the Associated Press:

Comptroller Thomas DiNapoli says the average rate will decrease from 20.1 percent of salary for most public workers to 18.2 percent. For police and firefighters the employer rate will drop from 27.6 percent of payroll to 24.7 percent.

The rate reduction announcement comes as the state’s pension system hit a record high of $180.7 billion. DiNapoli says the fund’s “solid investment performance” means local taxpayers won’t have to contribute as high a percentage toward their employees’ retirement costs.

DiNapoli says that with recent investment gains the state’s pension fund is now 92.2 percent funded. That’s an increase from 88.7 percent.

New York City’s pension funds combined returned around 17 percent last fiscal year. Decreasing employer contributions had been on the table since July, after the returns were announced.

School Contributions to NY Teachers Retirement System To Increase Next Year; Marks 58% Bump Since 2012

The New York State Teacher’s Retirement System announced Wednesday that school district contribution rates will increase by 8 percent next year, rising from 16.25 percent to 17.53 percent.

[The official announcement can be seen embedded at the bottom of this post.]

The new contribution rate doesn’t go into effect until the fall of 2015.

Including the latest increase, school district contribution rates have increase 58 percent since 2012—the contribution rate in 2012 was 11.05 percent, according to the Public Fund Survey.

That’s partially because the System is paying out more pension benefits than ever before; NYSTRS will pay out $6.3 billion in pensions in fiscal year 2014-15, according to the System’s spokesman. In 2009-10, that number was $5.3 billion.

The NYSTRS, once fully funded, has been on a steady decline for years.

The funded ratio has since dropped to 89.8%, according to the most recent data available.

Here’s the official announcement from the NYSTRS:

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CalPERS votes in favor of rate hikes

Retirees are living longer—and that’s bad news for the many pension funds that are already suffocating under the weight of their unfunded liabilities.

But one of the world’s largest pension funds has taken a step to counteract the soaring expenses that accompany longer life spans: the CalPERS board voted today to incorporate retirees’ longer lives into the formula used to determine taxpayer contributions to their fund.

The result will be higher contribution rates to the fund by the state and local governments of California; the state, starting July 1, will be expected to contribute $5 billion over three years to the fund, an increase from $3.8 billion previously.

Local governments will not see their contribution rates increase until 2016, in an effort curb some stress on the state’s cities, some of which are going through bankruptcy proceedings.

The CalPERS board took into account projections that by 2028, men are expected to live 2.1 years longer and women an average of 1.6 years longer. Such an increase, if not addressed, would lead to the state’s pension expenses ballooning by $1.2 billion, or 32%, annually.