City faces $1B jump in pensions

back

Support Global Action on Aging!

Thanks!

City faces $1B jump in pensions

By Michael Saul

Daily News City Hall Bureau April 30, 2003

The city's pension costs are expected to rise by $1 billion next year, creating another huge hole in the city's budget, Mayor Bloomberg said yesterday.

"Next year, the city's labor pension costs go up by $1 billion - and that's not really influenced by whether we change the size of the city's labor force, nor what happens in the stock market," Bloomberg said at a news conference.

The city is scheduled to spend $1.76 billion on pensions during the current fiscal year, which ends June 30. The following year, pension costs are expected to rise 55%, to $2.72 billion.

The city's skyrocketing pension costs are a direct result of a sweetening of benefits for retirees and the continued downturn in the stock market.

According to the city controller's office, the pension funds lost 8.3% in fiscal years 2001 and 2002 and lost an additional 7.3% during the first half of this fiscal year.

The system assumes it will earn 8% on its investments each year, and any shortfall must be made up.

Some losses from previous fiscal years will be paid in 2004, said Bloomberg spokesman Jordan Barowitz.

The pension sweeteners have been included in state labor legislation, he said.

For example, over city officials' objections, the state approved cost-of-living adjustments for retirees about three years ago. Retired civil servants now receive automatic pension increases based on the inflation rate.