Taxpayers Could Be On the Hook
New York City officials are bracing for increased pressure on the budget as the city’s pension funds are reeling from the credit crisis and posting billions of dollars in losses. In the nine months leading up to March 31, the city’s five pension funds lost a total of nearly $5 billion, or 4.4%, according to data from the city comptroller’s office. This is a far cry from projections published as recently as last month, when budget planners assumed the pension system would post no losses.
If those losses are not recovered by the end of the fiscal year, which ends Monday, the city will have to pay out several billion dollars through 2015, with the first payment of $190 million set for 2010.
The government will have to make up the shortfall from the poor performance of the pension funds at a time when it is already suffering from tax revenue losses due to a souring economy.
“In itself, it’s manageable,” the research director for the Citizens Budget Commission, Charles Brecher, said of the pension fund losses. “The fact that it’s going to be combined with revenue shortfalls means that we’ve got serious problems.”
The Teachers’ Retirement System of the City of New York, which has lost 5.06% of its value in the nine months ending March 31, has been the worst performer so far this year. The New York City Employees’ Retirement System, which lost 3.98% in the same period, performed the best. Other pension funds include the New York City Police Pension Fund, the New York City Fire Department Pension Fund, and the Board of Education Retirement System of the City of New York. Numbers for the state pension system are not yet available, a spokesman for the state comptroller said.