Feb. 2 (Bloomberg) -- New York Governor Andrew Cuomo’s proposal to save taxpayers $113 billion over 30 years by overhauling the pension system is “extremely unlikely” to be in place by the April 1 deadline, according to Comptroller Thomas DiNapoli’s office.
The changes include giving employees the option of choosing a 401(k)-style plan instead of a traditional government pension. They would go into effect if lawmakers approve Cuomo’s $132.5 billion proposed budget before the fiscal year ends March 31, Mike Dutcher, an actuary for New York’s retirement system, wrote in a budget analysis obtained today through a Freedom of Information Law request.
“Remittance of employer contributions on a payroll schedule, rather than annually under the defined-benefit plan, will affect employers’ cash management,” Dutcher wrote in the note. “It also seems extremely unlikely that such a plan could be implemented by April 1.”
Implementing the changes would cost as much as $16 million, the note said.
Morris Peters, a spokesman for Cuomo’s Budget Division, said in an e-mail that the pension group is reviewing the comptroller’s analysis. Josh Vlasto, a Cuomo spokesman, didn’t respond to an e-mail and phone call requesting comment.
DiNapoli, a 57-year-old Democrat and the New York fund’s sole trustee, has spoken out against public employers switching from traditional government pensions to so-called defined- contribution plans. He said he hasn’t dismissed Cuomo’s proposal.
“The problem is the spike in costs right now,” DiNapoli said after a speech in Washington last month where he called “extreme” 401(k)-type plans for public workers. “This may not be the solution to that.”
New York’s $133.8 billion fund, the third-largest U.S. public pension, has raised contribution rates on state and local employers as the fund’s investments dipped with the economy. The fund was down 5.8 percent as of Sept. 30 from when the fiscal year began April 1, DiNapoli said in a November statement.
Cuomo’s plan is meant to reduce those rates over time, in part by keeping employees who choose the defined-contribution option out of the system.
The governor’s plan would save public employers outside of New York City $83 billion over 30 years, and the city $30 billion over the same period, Cuomo, a 54-year-old Democrat, has said.
--With Assistance from William Selway in Washington. Editors: Mark Schoifet, Mark Tannenbaum
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