DiNapoli: Time to boost amount paid to public pensions

ALBANY — State Comptroller Thomas DiNapoli on Thursday raised the rate that state and local governments must pay for the employer contribution to public workers’ pensions, which in the past has sometimes pressured municipalities to increase property taxes.

DiNapoli said the average contribution rate paid by public sector employers will be 15.2%, up from 13.1%, for the next fiscal year that begins in 2024. For police and firefighter pensions, the employer rate will increase to 31.2%, from 27.8%, DiNapoli said.

The percentages are the cost that government entities from villages to state government must pay and it is among the biggest expenses of government, so an increase further stresses budgets.

There was no immediate comment from the New York State Association of Counties on how the increases might impact local property taxes.

“Our state’s pension fund remains one of the strongest pension funds in the nation, and the rates announced today will help ensure that public workers and their families can rely upon the retirement benefits promised to them,” DiNapoli said.

In July, DiNapoli warned that the value of the pension fund shrank in the state fiscal year that ended March 31 because of stock market losses, and that would likely result in higher taxes as the state and local governments replenish the fund. He said investment return was -4.14% then, and the fund was valued at $248.5 billion, down from $272.1 billion in the year ended March 31, 2022.

A year ago, DiNapoli also raised the employer rate after investments lost value in the wake of the COVID-19 pandemic and economic shutdown. The average employer's rate rose to 13.1% of payroll, from 11.6%, for most governments; and to 27.8% of payroll, from 27%, for police and firefighter plans.

DiNapoli is the sole trustee of the pension systems. He manages the investment that pays into pension plans for 700,000 current and former state and local governments and pays pensions to 500,000 retirees and their beneficiaries. The public sector workers are employed in 3,000 government entities from villages to state government.

The retirement fund’s long-term assumed rate of return is 5.9%.

E.J. McMahon of the fiscally conservative think tank Empire Center said the cost of the increased employer benefits will be about $350 million to governments in 2024.

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.