New York City’s chief actuary joined Mayor Michael Bloomberg and Comptroller John Liu in predicting that the biggest U.S. city will lower the assumed return on its $100.5 billion pension fund from the current 8% rate.
Robert North, who is evaluating changes to the actuarial assumptions of the city’s five retirement plans, said he’ll present recommendations to their boards in mid-2011. He declined to say what the new rate might be. Any change in the assumed rate of return on the city’s investments must be approved by the state Legislature.
“We anticipate the proposed package is likely to result in significantly greater employer costs,” Mr. North said in a telephone interview with Bloomberg News on Friday. “We may end up with some phase-in or deferrals.”
New York will likely contribute $8.3 billion for its city pension plans in the next fiscal year, a 19% increase, Budget Director Mark Page said two weeks ago. The jump is partially due to the city shifting $600 million of its contributions from this year into fiscal 2012, which starts July 1.
Mr. North said New York would likely need the state Legislature to approve a temporary extension of the current actuarial interest-rate assumption beyond the end of this fiscal year because an independent actuary, the Hay Group, won’t finish reviewing the city’s assumptions until the first half of 2011.