NY comptroller candidate slams pension funding
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Wilson pushes pension under funding as "largest financial problem;" DiNapoli says pension fully funded despite decline.
The same day the New York state comptroller announced sharp declines in the state’s pension assets, his opponent charged the system could be under funded by as much as $80 billion.
Harry Wilson, candidate for state comptroller, released a 50-page report Thursday challenging past claims made by current comptroller Thomas P. DiNapoli that the state’s public employee retirement system was fully funded.
“An honest accounting of pension assets and liabilities would reveal a substantial under funding in New York State’s Common Retirement Fund of anywhere from $30 billion to $80 billion,” said Wilson, a Republican.
At issue are accounting methods used by public pensions nationwide that allow actuaries to count assets that have not yet accumulated and to “smooth” market losses by spreading them over several years.
Wilson said New York and states around the country use the accounting methods to avoid funding future obligations, which are lawfully guaranteed and will have to be paid for by future taxpayers.
“The coming public pension crisis is the largest financial problem our nation faces at the state level,” said Wilson, who predicts the disaster will dwarf the American financial company bailouts.
Wilson’s report was issued the same day DiNapoli lowered the assumed rate of return on investments to 7.5 percent, following a quarter that saw pension assets fall to $124.8 billion, a decline 4.38 percent.
An official for the New York State Comptroller’s Office did not return a call left Thursday seeking comment regarding Wilson’s claims.
Andrew Biggs, a resident scholar at the American Enterprise Institute, indicated the new rate of 7.5 percent was still a generous an estimate.
He said that Wilson’s claims are not without substance.
“He is basically right,” said Biggs, a former deputy commissioner of the Social Security Administration. “Most economists take it for granted that (the current system) is wrong.”
Biggs said pensions are funding guaranteed assets with benefits that contain risk, something actuaries often do not account for.
The system has persisted because it’s convenient for lawmakers, retirees and taxpayers, all of whom are relieved from the immediate pain of tax hikes or benefit cuts, Biggs said.
“It’s the future taxpayer who is getting the raw deal,” Biggs said.
Jonathan Miltimore is a national reporter for The Franklin Center for Government and Public Integrity. jonathan.miltimore@franklincenterhq.org
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Tags: Biggs, Comptroller, fund, New, Pension, York
