Contribution rates for public employers in New York are set to increase as Wall Street gyrations over the last several months have created headwinds for the state pension fund, New York Comptroller Tom DiNapoli's office on Thursday announced.
The announcement, which will affect rates for the fiscal year beginning April 1, 2023, is the latest example of how the ongoing economic uncertainty is leading to elected officials to take more cautious approaches.
Contribution rates for the Employees' Retirement System are set to rise from 11.6% of payroll to 13.1%. For the Police and Fire Retirement System, contribution rates will increase from 27% of payroll to 27.8%.
“The state pension fund’s performance in the fiscal year that ended March 31 was strong, but recent domestic and global economic volatility demands caution,” DiNapoli said. “As we move forward with our prudent investment strategy, we remain focused on long-term stable returns for New York’s public employers and workforce. Uncertainty may be a constant in financial markets, but the rates announced today will help ensure that New York’s pension fund will continue to be one of the nation’s strongest and best funded, ready to provide retirement security for generations to come.”
In August, DiNapoli's office announced the state's pension fund posted a rare negative rate of return for the first three months of the fiscal year. The fund dropped in value from $272.1 billion at the end of March to $246.3 billion after nearly $3.7 billion was paid out.
DiNapoli's office kept the assumed rate of return at 5.9% for the remainder of the fiscal year.
Concerns over a looming recession have led some elected officials to shine yellow lights on spending. Earlier this year, Gov. Kathy Hochul told leaders of state agencies and departments to prepare for the potential of slower spending if the economy continues to struggle.
Hochul has also pointed to the billions of dollars transferred to the state's rainy day fund in order to bolster the state's finances against a downturn.