New York State's pension fund may require government help due to the turmoil on Wall Street, according to the fund's trustee Carl McCall.
McCall, sole trustee of the New York State Common Retirement Fund, said that the economic downturn could lead to New York’s State, county and municipal governments having to resume paying employer contributions to the pension fund.
Three years ago, the state suspended paying contributions as the stock market continued rising. Prior to that employer contributions stood at 6%. McCall stated that as the stock market is now on a downturn, governments could have to start paying between 1% and 1.5% in contributions.
Last year, the fund was valued at $127bn (£89bn). At the start of the year, that dropped to $120bn (£84bn), and according to a spokesperson for McCall the true extent of the fund’s losses will not be known until the fund has been evaluated. That process will be begin on March 31, the end of the fiscal year in NY State.
McCall’s comments do not apply to the Teachers of NY City Employees fund as they are covered by other pension funds.
According to McCall’s spokesperson, the state constitution states that the state can not cut back on retirement benefits. This means that in the event of the pension fund being underfunded at the end of the fiscal year employers would have to make up the shortfall.
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