The U.S. Census Bureau has released 2007 data on the financial status of state and local government pension plans in the U.S. The data is at the state level, and is at present separate from data from the rest of the finance phase of the 2007 Census of Governments, so only limited conclusions may be drawn from it, but I’ve calculated some ratios to see how New York compares. What the data shows is that New York State’s pension plans, and in particular New York City’s pension plans, tend to be on the extreme end compared with other states by a variety of measures. There are more retirees relative to the number of workers in New York. Public employees contribute less to their own pensions here. For New York City, payments to pensioners and others are draining existing assets at an above-average rate. And, perhaps in an attempt to get out of the hole, New York’s plans were among the most highly invested in risky stocks in fiscal 2007.
On June 29th 2007, the last trading day of that fiscal year, the S&P 500 was at 1,505.70, while as I write this it is at about 925, a loss of 38.6%. Based on the assumption that the pension funds earn 8 percent per year, it should be at 1,756 by now starting at June 2007. Then again, starting at June 2000, when that assumption was made by state law, it should be at 2,960, or triple its actual level. It’s based on assumptions like those that all those pension enhancements over the past decade were described as “free.”