On Tuesday, there was a report that the State Comptroller might lower the assumed rate of return on the State's pension fund. Thursday, he did just that.
Tom DiNapoli announced that for the first time in 10 years, New York State will expect a 7.5-percent return – not 8% - on investments made on Wall Street with pension fund money. Even if you never worked for the State a day in your life, this change will likely affect you.
Here's how it works: Every State worker who is promised a pension will receive that pension whether the state can afford it or not. It's a constitutional obligation. So, when Wall Street is in the doldrums, and returns fall too short to cover pension checks, the State must find another way of making up the difference. And usually that's raising property taxes…
Retirees collecting pensions are on the rise. In hindsight, the benefits packages that politicians like George Pataki made to workers back when times were good are coming back to haunt them. According to the State Comptroller, this is bad news that the counties should have been expecting…
DiNapoli said, "We have been warning that there would be an increase".
What if Wall Street doesn't regain lost ground? What then?
E.J. McMahon, Empire Center for NYS Policy said, "Nip this in the bud, we have to stop the bleeding in the pension system first of all by closing to new entrants. Its very important to stop granting pension rights to new employees by moving them to defined contribution retirement plans.
Not the most popular move in NY where State workers unions are politically powerful and help candidates get out the vote
