Evaluation

When the NYC pension fund gets its first pay raise in six years

The New York City pension fund is about to get its first payout since the start of the financial crisis in 2008. 

The $1.2 billion New York State Employees Retirement System, known as NYSEERS, has been operating under a budget shortfall for three straight years. 

Since January of this year, the fund’s annual surplus has been around $400 million, and it will now receive an additional $600 million from the New York state pension plan. 

That $600-million increase comes from the state’s $1,000 per year “New York State Employee Retirement Savings Account” (NYSEERS), which the pension plan uses to fund its retirement funds. 

According to a statement issued by NYSEER on Tuesday, the pension fund’s board has approved an increase to its “primary contribution” to $2.25 billion, from $2 billion. 

NYSEER will receive a 2.25 percent “primary increase” in its “fund balance” from September 30 through October 1, 2019, an increase of $100 million, to a total of $2,375 million. 

It is the first pension fund payout in six months. 

This past January, the NYSEers board also approved a $1 billion primary increase to the fund, but this was the second consecutive year that the board voted against raising the fund balance. 

After the December 7 pension vote, the New Yorkers board voted in favor of increasing its pension contributions to $1 million a year, a 6.25-percent increase. 

 In 2017, the state passed a law that requires the NYSERS fund to balance its assets with a portion of its assets held in the state pension plans. 

In January of 2019, that law was extended for another two years, meaning that the pension funds assets must be held in NYSEES. 

“This is the second time in six quarters that we have had an additional year to balance our books,” NYSEer said in a statement. 

With the pension contribution increase, the funds total assets held by NYSers will rise by $2 million. 

 NYSERS has a $3.5 billion primary surplus that it uses to finance its retirement plan.

That surplus is about $1 in every $3 of the NY State Employees retirement fund’s total assets. 

There are no other NYSE assets in the New Yorker’s pension plan, and NYSE has had no plans to sell off its assets.

The fund also has no plans for a sale. 

While the NYPS has been able to meet its primary pension funding goal, NYSE was under financial stress as a result of the 2008 financial crisis and the resulting crisis in the U.S. economy. 

During that time, the government shut down the NYPLs pensions, including NYSE, NYNS, and the NewYork Public Service Pension Fund, which pays pensions to state employees in New York. 

When the crisis struck in December of 2008, the combined NYPS and NYPS-NJPS retirement funds lost nearly half of their value, leaving New York public service workers and state employees to pick up the rest of the tab. 

New York Public Service is still able to cover the majority of its retirees with the $6.2-billion NYPS pension fund. 

But the state also needs to be able to keep up with a projected $2 trillion pension debt over the next 30 years.

The New Yorkers pension fund needs to have a budget surplus in order to cover its retirement obligations, according to NYPS. 

Given the challenges in New Yorker pensions, the board has been considering a “revenue stream” in order for the NYPPS to keep its pension fund solvent. 

Earlier this year the board discussed the possibility of raising its primary contribution by $100 per year, from 1.75 percent to 2.75%. 

In addition, the trustees are considering raising the pension value of NYPS to $3 billion, an amount that would bring the total value of the state funds assets to $5.7 trillion, or more than half of its total assets, by 2020. 

At the same time, NYPS also has $2-million annual contributions from the NY PS and NYNS funds.

This is the equivalent of the total of the combined assets held on NYPS by the two funds. 

 “We believe this is an appropriate step to maintain our financial stability and the fund is not under any financial pressure,” NYPS Board of Governors Chair Robert J. Dolan said in the statement.

“It is also important to remember that this revenue stream will provide an additional cushion to offset potential shortfalls in the pension system that may arise.” 

This is an update from our original story.