Pension costs for state and local governments are set to rise 16 percent in the 2012-13 fiscal year and jump 19 percent for police and fire pensions, Comptroller Thomas DiNapoli announced this afternoon.
The higher costs were expected and are less than the increase in the current fiscal year—when state and local governments saw pension expenses rise 37 percent.
But the added expense is another hit to state and local budgets already grappling with rising costs and stagnant revenue.
“The Common Retirement Fund has had two consecutive years of strong investment returns,” DiNapoli said in a statement. “However, we are still incorporating the market loss of 2008-09 into our employer contribution rates. While rates will continue to increase, the size of that increase is less than it has been for the past two years.”
The new pension payments are for the 2012-13 fiscal year, which starts April 1. Local and state governments would have to make the payments in either December 2012 or February 2013.
The average contribution rate for the Employee Retirement System will increase from 16.3 percent 18.9 percent of salary. The average contribution rate for the Police and Fire Retirement System will increase from 21.6 percent to 25.8 percent, DiNapoli said.
DiNapoli’s announcement comes just days after the teachers’ retirement system announced school districts are being hit with a 29 percent increase in their pension costs this school year. Schools will have to pay 11.11 percent of their payroll toward retirement costs in 2012, up from 8.62 percent in the prior school year.
The state pension fund, which pays benefits to about 350,000 state retirees and has 650,000 current employees, has had wide swings in returns in recent years due to the volatility of the stock market. That along with more retirees has fueled higher pension costs for public employees, which are paid by taxpayers.