US - Actuarial changes to the pension system are set to save the city of New York US$1.4bn over the next two years, although they will lead to long term cost hikes.
This is according to a report released by NY state comptroller Alan Hevesi, who said the pension revision came as welcome news, as it reduced the budget deficit to a “manageable” $647m - far lower than the $4.5bn figure touted earlier this year.
The budget gap has since been revised twice, dropping first to $2.3bn after the city collected more tax than originally expected, and again now thanks to revised actuarial assumptions, explained Hevesi.
“The November 2005 financial plan does not reflect the changes in actuarial assumptions and methodologies that were recently approved by the boards of the City’s pension funds.”
These changes would reduce planned pension contributions for fiscal years 2006 and 2007 by $1.4bn. But while that represented a short term boost, Hevesi warned that the changes would increase future costs.
The report also noted the growing burden of debt service, Medicaid, pension contributions, and health insurance, which was projected to consume over half of city-fund revenues in financial year 2007, significantly higher than the 37% in 2003.
Despite the substantial improvement in the City’s short-term fiscal outlook, the budget gaps for fiscal years 2008 and 2009 remained essentially unchanged from the July forecast, at about $4bn annually, said Hevesi
The Pensions and Lifetime Savings Association (PLSA) has revamped the standards for its Pension Quality Mark (PQM) in a bid to raise the quality of single-employer defined contribution schemes.
People approaching retirement are "systematically misjudging" their longevity and undervaluing annuities, the Institute for Fiscal Studies (IFS) says.
Professional Pensions is holding a breakfast briefing on engaging defined contribution (DC) members on 7 February.
Panellists at a PP webinar discuss October's High Court judgment on GMP equalisation, how schemes have responded, what their strategies should be, and how the industry can approach it.