about NY State’s pension “crisis”
Pension reform has long been a primary issue for PEF and the 52,000 public employees we represent. It is disturbing to see the almost continuous stream of stories about the cost of public pensions and the blame being placed on the enhancement of the benefits as the cause for the rising costs.
Placing the blame for increased pension costs on the employees who receive the benefits is to ignore the facts, and is a ruse used by groups seeking to unfairly shift the cost of the state pension system away from public employers and roll back benefits for new members entering the state retirement system.
The facts concerning the increased costs to public employers speak for themselves.
As a result of losses in the equity market, the retirement fund lost over $31 billion in value between 2000 and 2003, of which the NYS Comptroller has attributed $9 billion directly to losses from corporate accounting scandals.
To place the loss of value of the retirement fund in perspective, these losses amount to over $32,000 for every member, pensioner, and beneficiary in the retirement system.
During the 1990’s the average rate of return of the pension fund was nearly 14 percent; since 2000 the average rate of return has been negative 5.3 percent annually.
The employer contribution for the Employee Retirement System, as a percentage of payroll, averaged just 1.52 percent through the 1990’s, an unsustainably low rate when you consider the average employer contribution for the 1980’s was 14.03 percent, and before that in the 1970’s employer contributions to the retirement fund routinely exceeded 20 percent of payroll.
The current employer contribution to the Employee Retirement System is 4.5 percent and is expected to rise to 12 percent next year. These levels remain significantly below the contribution rates of the 1970’s and 80’s.
Without a fair reporting of these facts, it becomes all too easy to blame the rise in employer pension contributions on employees and use it to justify retirement funding schemes that threaten the retirement plans of hundreds of thousands of retirees and public employees.
PEF has worked hard over the past decade to reduce inequities in the state pension system and to make the pension fund more secure for our members.
We will not let others undo this work. Public employees are not the primary cause for increases in employer contributions and should not be targeted as the primary solution.
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This ad appeared as a black & white version in the April 26, 2004 edition of The Legislative Gazette.
This ad was originally created by PEF's Public Relations Dept. © Copyright 2004.