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Low pension return may $oak taxpayers
By BRENDAN SCOTT Post Correspondent

Last Updated: 6:30 AM, August 21, 2010

Posted: 1:53 AM, August 21, 2010

ALBANY -- State Comptroller Thomas DiNapoli revealed plans yesterday to slash the state pension fund's growth forecast for the first time in a decade amid growing concerns about exploding retirement costs.

The comptroller is considering cutting the $133 billion pension fund's expected rate of return to as low as 7.5 percent, DiNapoli spokesman Robert Whalen said, a move that could sock local taxpayers with hundreds of millions -- if not billions -- of dollars in new costs.

"It is likely that the assumed rate of return will be reduced," Whalen said. "You could see the writing on the wall with what was coming."

The rate has been locked at 8 percent since 2000, and DiNapoli's office had as late as June defended it as "the industry standard" despite warnings from budget hawks that the rosy number masked a looming pension crisis.

The comptroller was mulling an internal recommendation and could also peg pension growth at 7.75 percent when he makes a final decision next month, Whalen said.

Either way, the fund's expected rate of return would sink to its lowest level since 1985.

"It's just trading one economic fallacy for another," said E.J. McMahon, of the business-backed Manhattan Institute. "Do you know anyone not named Madoff who's willing to guarantee you a 7.5 percent rate of return?"

The seemingly subtle shift, however, could mean a big hit for local governments, which count pension payments among their largest expenses.

Before any change, local pension contributions were slated to rise from 7.4 percent of payroll this year to 11.9 percent next year.

"I'm sure it's going to be very significant," said Peter Baynes, of the New York Conference of Mayors. "Pension costs are already devouring budgets and driving up property taxes. It's only going to make matters worse."

For example, local governments are on the hook for an estimated $3.9 billion in pension costs next year under the current growth rate of 8 percent. Lowering the rate to 6 percent would increase the bill to $10.3 billion.

DiNapoli's Republican opponent, former hedge-fund manager Harry Wilson, advocates cutting the growth rate to 5 or 6 percent but says the comptroller should first act to prevent taxpayers from making up the difference.

"Mr. DiNapoli should be providing New Yorkers with the truth of just how big our pension hole is and what reforms can be put in place to manage that problem over time," Wilson said. "Instead, he just socks the taxpayers with the bill without any effort to deal with this massive problem."

DiNapoli's announcement came on the same day two leading pension experts released a nationwide study showing that state and local governments could be low-balling pension liabilities by more than $3 trillion.

The Northwestern University report found that taxpayers would still face a $1 trillion bill to cover retirements of public workers even if state legislators eliminated cost-of-living increases and raised the retirement age.

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There are two threats to your pension:
1) Market risk. The ability of the NYS Teachers" Retirement System to continue paying benefits depends on the management of the funds collected from school boards and members. Obviously, the downturn in the stock maket over the last 18 months has had an impact on the retirement fund. Click here to read the statement issued by the NYS Teachers' Retirement System.
2) Legal risk. Did you notice the part of the retirement board's statement linked above which said: "Despite market volatility, you can rest assured your retirement fund is safe, secure and guaranteed by the New York State Constitution."? It's important to understand that NY is the ONLY state to provide a constitutional guarantee that your pension, once earned, cannot be reduced.
That constitutional guarantee may disappear, however, if a constitutional convention is held. A convention could eliminate this protection for our pensions, and there are lots of folks out there who want to do just that! Here's a statement from NYSUT:
"Here in New York, the protection of public pensions goes all the way back to 1938, when voters amended the New York State Constitution to guarantee pension benefits. That's why holding a constitutional convention could be so dangerous....
We are the only state in the nation with a constitutional guarantee that one's pension benefits cannot be reduced. If there is a constitutional convention, the constitutional guarantee for all public employees, in-service and retired members, could be removed. If New York legislators truly want to reform certain lawmaking procedures like budget preparation ..., all they have to do is pass individual bills targeting the specific procedures they want to reform."
In addition, there is talk of doing away with our traditional "defined-benefit" pension system, and replacing it with a "defined-contribution" system, such as the 401k's that lost so much of their worth during the stock market downturn. According to NYSUT:
.
"...Advocates argue the changes would give workers more flexibility and control over their pensions, let's not fool ourselves!
Scrapping defined-benefit public pension plans like we have here in New York in favor of defined-contribution plans would be a big mistake. Here's why. Right now, your defined-benefit plan is based on the number of years you teach, final average salary and your age at retirement. Your monthly payment is guaranteed until the day you die. Most plans also offer joint survivor benefits and annual Cost-Of-Living Adjustments to guard against inflation.
However, under a defined contribution plan, you're out of luck if your happen to retire when the stock market goes down. Or if you make the wrong investment choices.
We're the only state with a constitutional guarantee. Article 5, Section 7 of the 1937 state constitution proclaims that our retirement benefits can never be diminished. Therefore, the forces that want to change our public pension system are actually promoting the passage of a bill in both houses calling for a constitutional convention that could repeal that guarantee.
We can't let that happen. Don't be deluded into thinking our benefits cannot be reduced. They can — but proponents have a few more hurdles to jump over here in New York ."
If defined-contribution systems like the 401k are so great, why did TIME Magazine run a cover story in its October 9, 2009 issue titled "Why It's Time to Retire the 401k?" You can read the entire story by clicking here. Here are some interesting quotes from the article:
"The tax-deferred 401(k) plan, and others like it, such as the 403(b) and the IRA, have become our nation's go-to retirement piggy bank. Invented nearly 30 years ago as an executive perk — one more way to dodge Uncle Sam — the 401(k) was never meant to replace the employer-guaranteed pension fund, supplemented by Social Security, as the cornerstone of our nation's retirement system. But propelled by a combination of companies looking to cut costs and consumers who wanted control of their retirement destiny, that's exactly what happened.
The ugly truth, though, is that the 401(k) is a lousy idea, a financial flop, a rotten repository for our retirement reserves. In the past two years, that has become all too clear. From the end of 2007 to the end of March 2009, the average 401(k) balance fell 31%, according to Fidelity. The accounts have rebounded, along with the rest of the market, but that's little help for those who retired — or were forced to — during the recession. In a system in which one year's gains build on the next, the disaster of 2008 will dent retirement savings long after the recession ends.
In what must seem like a cruel joke to many, the accounts proved the most dangerous for those closest to retirement. During the market downturn, the 401(k)s of 55-to-65-year-olds lost a quarter more than those of their 35-to-45-year-old colleagues. That's because in your early years, your 401(k)'s growth is driven mostly by contributions. You control your own destiny. But the longer you hold a 401(k), the more market-exposed it becomes. It's a twist that breaks the most basic rule of financial planning."
"The average 401(k) has a balance of $45,519. That's not retirement. That's two years of college. Even worse, 46% of all 401(k) accounts have less than $10,000. Today, just 21% of all U.S. workers are covered by traditional pensions, and the number shrinks every year. "The time may have come to consider returning 401(k) plans to their original position as a third tier of retirement planning, behind pensions and Social Security," says Alicia Munnell, who heads the Center for Retirement Research at Boston College. "They should not be the thing we rely on for retirement security." And the government seems to agree. This summer, the Government Accountability Office concluded, "If no action is taken, a considerable number of Americans face the prospect of a reduced standard of living in retirement." That's what is known as an understatement."
"Congress was trying to close a loophole on executive bonuses when it created the 401(k). Most companies intended 401(k)s — which were originally called salary-reduction plans but then renamed for the portion of the tax code that makes them possible — to be a perk for highly paid executives, not a pension replacement. That's because lower-paid employees probably could not afford to defer a portion of their paychecks. So companies held on to their pension systems even as they added 401(k)s, which by law they had to make available to all employees. When the market took off in the 1980s, the rank and file clamored to get in.
With a 401(k), contributions came out of your pay but were not taxed, and you had control of them. Contributions could be added or suspended. Best of all, when you left your company, your 401(k) traveled with you, removing a penalty for switching jobs that had been built into the pension system. On the corporate end, a change in accounting rules made the growing cost of pensions more apparent to shareholders. Cutting the pension was a guaranteed way to improve the bottom line. The rise of the 401(k) began."
Don't be fooled by those who claim there is a "huge jump in teacher pension costs" to local school districts which requires changes in the teacher pension system!
Here are the costs, as a percentage of total salaries, paid by local school districts over the last 30 years. The NYS Teachers' Retirement System refers to this as the "employer contribution rate (ECR)." The rate for the 2009-2010 school year is 6.19%, only about one-quarter of what schools paid in the 1979-1985 era. (How can it be that the ECR is LOWER this year in light of what happened to the stock market? You can get the full story about the ECR by clicking here to go to the NYS Teacher Retirement System website's ECR section.)

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The 10 States Most Likely To Default

  
6/11
  
New York CDS spread --

New York state is facing a deficit of $60.8 billion over the next five years, according to Reuters.


Read more: http://www.businessinsider.com.....-bps-6#ixzz1bWFadBw1

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The New York State and Local Retirement System (NYSLRS) comprises two different systems, though they are administered by the same staff. They are the Employees’ Retirement System (ERS) with more than 637,900 members and the Police and Fire Retirement System (PFRS) with more than 34,800 members. There are also more than 385,000 pensioners and beneficiaries in the System bringing the total to more than 1,057,700 participants, as of March 31, 2011.

ERS provides service and disability retirement benefits, as well as death benefits to employees of participating public employers in non-teaching positions, exclusive of New York City. This includes uniformed services personnel, such as correction officers and sheriffs.

PFRS provides service and disability retirement benefits, as well as death benefits to police officers and firefighters who work for participating public employers, exclusive of New York City.

The New York State Comptroller is the administrative head of the Retirement System. As fiduciary, the Comptroller acts in the best interests of the System’s members and retirees. The Comptroller is the sole trustee of the Common Retirement Fund (valued at over $146.9 billion as of June 30, 2011). He also ensures that the 292 different benefit programs offered by NYSLRS are managed properly and effectively.

See the Retirement System’s Comprehensive Annual Financial Report for additional information about the Retirement System’s assets.

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Thomas P. DiNapoli

State Comptroller Thomas P. DiNapoli was elected to a full four-year term as New York State Comptroller in November 2010.

Since first taking the position in February 2007, DiNapoli has transformed the way his office does business, instilling reforms to make government more effective, efficient and ethical. He has pushed for increased transparency and accountability in government, and identified billions of dollars in waste, fraud, abuse and mismanagement.

DiNapoli, New York’s chief fiscal officer, is responsible for auditing the operations of all State agencies and local governments, managing the State’s pension fund, overseeing the New York State and Local Retirement System, reviewing the State and New York City budgets, approving State contracts, and administering the State’s payroll and central accounting system.

As sole trustee for the $146.9 billion State pension fund, one of the largest institutional investors in the world, DiNapoli has:
•Safeguarded the interests of over one million members, retirees and beneficiaries
•Imposed tough new rules to prevent improper influence on investment decisions, and enhanced public disclosure
•Invested millions of dollars in New York companies to grow the State’s economy
•Fought for changes in Iran and Sudan, promoting responsible investing
•Created opportunities for minority and women fund managers.

As the State’s fiscal watchdog, DiNapoli has emphasized that “every dime counts.” He has been an outspoken critic of fiscal gimmicks and other poor budget practices. His accomplishments and initiatives include:
•Overseeing nearly 550 audits in 2009, and identifying more than $1.5 billion in savings and revenue enhancements for State and local governments
•Completing a five-year school accountability project which involved auditing all 733 school districts and BOCES in the State
•Conducting regular audits of the State’s $45 billion Medicaid program, which identified $182 million in overpayments and savings in 2009
•Giving the public unprecedented access to financial data on government revenues and expenditures through his Open Book New York website
•Proposing reforms to make the State budget process more responsible and open, and correct the chronic imbalance between income and spending
•Proposing reforms to bring State borrowing under control.

DiNapoli is committed to making State government serve the people of New York better. His reforms include:
•New regulations to prevent ineligible individuals from collecting pensions
•Enabling the public to track how the State is spending federal stimulus dollars, and stopping questionable stimulus contracts
•A financial education initiative, Your Money New York, to help ordinary citizens make smart decisions with their money
•An ambitious Green Initiative to promote cost-effective, environmentally sustainable practices
•Improvements to the State contracting process to encourage competition and ensure vendor responsibility, prompt contracting and equal opportunity
•New ethics rules to ensure all employees in the Office of the State Comptroller conduct themselves according to the highest standards of integrity.

Previously, DiNapoli represented northwestern Nassau County in the State Assembly for 20 years. During his legislative career, he fought to restore fiscal responsibility in Nassau County, prevent fraud and mismanagement in school districts, and clean up the State’s water supply.

A lifelong resident of Nassau County, DiNapoli first gained recognition in 1972 when he was elected to the Mineola Board of Education at the age of 18, becoming the youngest person in New York State to hold public office. He holds a bachelor’s degree in history from Hofstra University and a master’s degree in management and urban policy from The New School University. Prior to his election to the Assembly, DiNapoli was a manager in the telecommunications industry and served as an adjunct professor.



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Three candidates battle for Rotterdam supervisor post
By PAUL NELSON Staff writer
Updated 06:21 p.m., Wednesday, October 26, 2011

ROTTERDAM -- Supervisor Francis "Frank" Del Gallo said he wants a second term so he can keep saving tax-weary residents money by running the town the way he's earned a living.

"I know how to run a business, the town is a business and I know how to save taxpayers money," said Del Gallo, 73. He used the bidding process to hire a law firm for $50,000, he said, when some Town Board members would have paid more for the legal work.

Challengers Brian McGarry, 54, with the No New Tax Party and the Republican line, too, and Harry Buffardi, a Democrat with four other parties' endorsements, say it takes more than a business sense to run the municipality day-to-day.

Del Gallo, who owns businesses in Rotterdam, blamed cutthroat Rotterdam politics for giving him a bad name. After failing to secure any endorsements, he created the Rotterdam First Party.

McGarry, an elementary school teacher for 20 years and a television cameraman for a decade, said his "varied experience" makes him well suited to lead Rotterdam.

"The taxpayers want the politicians to stop the bleeding," he said, asserting that residents are being "crushed" by rising property taxes for government and schools. If elected, McGarry said he would huddle with department heads and "lay out a global vision of conservative spending" to rein in spending.........................>>>>..................>>>>...........Read more: http://www.timesunion.com/loca.....39.php#ixzz1bySgpnY7