August 24, 2011
Comptroller Announces 2013 Employer Contribution Rates for the New York State and Local Retirement System
State Comptroller Thomas P. DiNapoli today announced the Fiscal Year 2012-13 employer contribution rates for the New York State and Local Retirement System. DiNapoli also certified the Retirement System actuary’s recommendations for the assumptions used in calculating employer contribution rates.
“The Common Retirement Fund has had two consecutive years of strong investment returns,” DiNapoli said. “However, we are still incorporating the market loss of 2008-09 into our employer contribution rates. While rates will continue to increase, the size of that increase is less than it has been for the past two years. New York has one of the best managed and best funded pension funds in the country. I remain confident that our long-term investment strategy will help us to weather this volatile economic environment.”
For Fiscal Year 2012-13, the average contribution rate for the Employee Retirement System (ERS) will increase from 16.3 percent of salaries to 18.9 percent, a change of 2.6 percentage points. The average contribution rate for the Police and Fire Retirement System (PFRS) will increase from 21.6 percent to 25.8 percent, a change of 4.2 percentage points. Rates for specific plans and tiers are available under "Contribution Rates and Related Information" on the Comptroller’s website at http://osc.state.ny.us/retire/employers/index.htm.
In an effort to aid localities as they budget for their employer contributions, DiNapoli directed the Retirement System to give localities access to a full estimate of their annual pension bill by September 1, six weeks earlier than in previous years. Employers use this estimate for preparation of budgets and calculation of tax levies subject to the property tax cap effective for fiscal years that begin in 2012. Projections of required contributions will vary by employer depending on factors such as retirement plans, salary amounts and the distribution of their employees among the five retirement tiers.
The newly-enacted property tax cap generally limits the amount a government entity can increase its annual tax levy to two percent or the rate of inflation, whichever is less. The cost of pensions above a change in the average contribution rate by more than two percentage points is excluded from the tax cap.
Since the ERS rate increase will be 2.6 percentage points higher than the previous year, the portion of an employer’s ERS contribution equal to 0.6 percent of salaries will be excludable from the tax cap. Similarly, since the PFRS rate increase is 4.2 percentage points higher than the previous year, the portion of the PFRS contribution equal to 2.2 percent of salaries will be excludable from the tax cap.