Posts Tagged ‘york’

The actuary as fall guy

According to Bloomberg New York City’s  chief actuary is recommending that the city’s $115.2 billion pension plans lower their assumed annual rate of return on assets to 7% from 8%, which would open a funding gap of at least $2 billion next year.  They go on to say that the city has already set aside $1 billion for the fiscal year beginning July 1 to cover an increase in its annual pension contribution.

So this sensible interest rate change will cost $2 billion and the city has $1 billion of that.  What about the other billion?

For that we turn to the New York Post which reports that, in addition to revising the rate of return, North is also recommending a change in key accounting practices which would allow the city to pass some of the costs to Bloomberg’s successors citing sources involved in the pension analysis who said North’s staff was concerned that too big a hit all at once could cause a budget catastrophe at City Hall.  “The impact would be too great,” said one analyst involved in the discussions between the actuary and the administration. “You have to look at the [city’s] ability to pay.”

No you don’t!

Continue reading