Employer contribution rates for the New York State and Local Retirement System (NYSLRS) in State Fiscal Year 2018-19 will decrease from State Fiscal Year 2017-18, New York State Comptroller Thomas P. DiNapoli announced today.
The estimated average contribution rate for the Employees’ Retirement System (ERS) will decrease from 15.3 percent of payroll to 14.9 percent of payroll. The estimated average contribution rate for the Police and Fire Retirement System (PFRS) will decrease from 24.4 percent to 23.5 percent of payroll.
"We’ve had strong recent investment returns that have helped keep rates stable," DiNapoli said. "Stable rates are very important to our employers and provide the predictability they need to plan for their future budgets. Prudent management helps keep New York State’s pension fund one of the strongest and best funded in the country and allows our public workforce to retire with security."
The investment rate of return was 11.48 percent as of March 31, 2017, the end of the fiscal year for the state pension fund.
Employer rates are determined based on actuarial assumptions recommended by the Retirement System’s Actuary and approved by DiNapoli. A copy of the Actuary’s report can be found here.
In 2015, the Actuary conducted a review of the Systems’ economic and demographic experience for the prior five years. The Actuary proposed assumptions and methods for the actuarial valuations, which were adopted by DiNapoli. Based on that report, DiNapoli lowered the assumed rate of return in 2015 from 7.5 percent to 7 percent. The median assumed rate of return among public pension funds is 7.5, according to a February 2017 brief issued by the National Association of State Retirement Administrators.
In 2012, DiNapoli began providing employers with access to a two-year projection of their annual pension bill six weeks earlier than in previous years. Employers use this projection for preparation of their local budgets.
Projections of required contributions vary by employer depending on factors such as retirement plans, salaries and the distribution of their employees among the six retirement tiers.
There are more than 3,000 participating employers in ERS and PFRS, and 335 different plan combinations.
Payments based on the new rates are due by Feb. 1, 2019, but may be pre-paid by Dec. 15, 2018.
In April, the Pew Charitable Trusts public policy foundation ranked New York’s pension system as the third best funded retirement system among states.
See a chart of historical employer contribution rates, visit: https://www.osc.state.ny.us/sites/default/files/other/documents/pdf/2019-04/historical-employer-contribution-average-rate.pdf