New York State Comptroller Thomas DiNapoli's recent decision to lower required contribution rates for two statewide pension systems is credit positive for the Empire State and its local governments, according to Moody's Investors Service.
"The lower rates will eliminate the state's recent practice of 'amortizing' a portion of its annual pension contributions and provide welcome relief to local governments around the state," said Moody's analyst Marcia Wagner in her Sept. 11 report. "They also reflect new actuarial assumptions that acknowledge tempered inflation and salary trends, which more than offset the impacts of a more conservative assumption about future investment returns on required funding."
DiNapoli announced on Sept. 4 that the average contribution rate for the Employees' Retirement System will drop from 18.2% of payroll to 15.5% for the fiscal calendar that starts July 1, 2016. The average contribution rate for the Police and Fire Retirement System will be cut from 24.7% of payroll to 24.3%. It marks the third consecutive year contribution rates have declined and DiNapoli's office estimates the total fiscal 2017 employer contributions in the two systems will decline to $4.8 billion.
