City taxpayers foot 90% of municipal pensions

By SUSAN EDELMAN
Last Updated: 11:38 AM, July 11, 2010
Posted: 2:10 AM, July 11, 2010

EXCLUSIVE
Taxpayers kick in an average $8.60 for every dollar that city employees contribute to their pensions, a sweet deal costing the Big Apple a bundle.

Even though their own retirements are less secure, as private businesses have shifted from traditional pensions to riskier savings plans like 401(k)s, taxpayers' support for rock-solid public employee pension plans is growing. That's because pension funds are guaranteed to grow 8 percent a year -- and taxpayers have to make up the difference if they don't.

Taxpayers' share of city pension costs has skyrocketed more than 900 percent in the last decade -- from $703.1 million in 2000 to $6.5 billion in 2009, according to the city comptroller's annual reports.

The cost is expected to hit $7.6 billion this fiscal year and $8.7 billion next year.

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"It's a double-whammy for taxpayers," said E.J. McMahon, a senior fellow at the Manhattan Institute.

"If they're privately employed, they shoulder the risks of saving for their own retirement. At the same time, they have to pay a steadily mounting cost of guaranteed pensions for government workers."

Teachers get the biggest bang for their pension contributions -- the city puts in $15.50 for every $1 they contribute.

Taxpayers pay $10 for every $1 firefighters put in, $9 for every $1 from cops and $5.60 for every $1 from transit, sanitation and other civil servants, the 2009 report shows.

"The cost has risen because employee benefits were dramatically increased in 2000, just as the [stock] market began to collapse," said John Murphy, former executive director of the New York City Employee Retirement System, NYCERS, the largest city pension fund.

"In retrospect, it was one of the most irresponsible things to have done," he said.

Many private companies cut back or suspended matching contributions to employee 401(k) plans after the most recent dramatic market downturn in 2008. Some have begun to restore contributions, depending on profits.

Teachers hired after 2008 contribute 4.85 percent of their salaries for their first 10 years, then 1.85 percent a year thereafter.

Cops and firefighters make annual pension contributions depending on their age at swearing in, at most 8 percent at age 20. But in a benefit called "Increased Take Home Pay," the city subsidizes 5 percent of that.

Cops and firefighters are guaranteed an 8.25 percent return on their contributions, and can take loans from the plans up to twice a year, interest-free.

It's only fair, said Anthony Garvey, who recently retired as executive director of the Police Pension Fund.

He said the benefits befit the Finest and Bravest who risk "getting shot or running into burning buildings."

Retire it's on us

Taxpayers kicked in $7.35 billion to the city pension funds last fiscal year, while employees contributed $853.5 million.

An average of: $8.60 to $1

TEACHERS
Average pension: $54,268
Taxpayer contribution: $15.50 to $1

FIREFIGHTERS
Average pension: $53,347
Taxpayer contribution: $10 to $1

POLICE
Average pension: $41,319
Taxpayer contribution: $9.13 to $1

SANIT., TRANSIT, OTHER
Average pension: $24,889
Taxpayer contribution: $5.60 to $1

Source: Comprehensive Annual Financial Report of the NYC Comptroller for fiscal year 2009.

susan.edelman@nypost.com

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