NEW YORK, NY — New York City’s public-retirement system is on an unsustainable path. Pension funds face persistent shortfalls, benefits consume a significant share of the city budget, and the current downturn has made the situation more dire. A new report by public-policy researcher John Hunt for the Manhattan Institute (MI) presents a number of reforms that would reduce retirement costs while bringing benefits in line with those received by public employees around the country.
“The prospect of less revenue flowing into city coffers seems especially daunting,” Hunt writes, “considering the scale of the city’s obligations to its retired public workers, current and future, raising the prospect of past promises crowding out future services.” The report, part of MI’s New York City: Reborn initiative, offers suggestions for reform and estimates the savings that would result.
The report proposes reforms along four lines:
- Paring back New York’s unusually generous post-employment health-care benefits;
- Transitioning pension plans in the direction of defined-contribution arrangements, by adopting annuity programs or cash-balance plans;
- Ensuring the effectiveness of any early-retirement initiative by targeting incentives to areas where the pandemic has reduced the needed headcount;
- Consolidating asset managers across the city’s five separate pension funds.
As Hunt observes, a smaller measure, such as consolidating asset management, would save an estimated $14 million annually, while more-ambitious measures could save far more. As part of the New York City: Reborn initiative, MI will continue to develop policies to secure the city’s financial future and preserve its competitiveness.
About New York City: Reborn
New York City: Reborn is a Manhattan Institute project that encompasses research, journalism, and event programming. Through this initiative, the institute convenes business, civic, academic, and civil-society leaders from around the city with MI scholars to discuss issues key to the city’s recovery. Post-coronavirus, MI envisions a growing New York City with a thriving economy, healthy finances, accessible housing, effective infrastructure, flourishing education, safe streets, and increasing competitiveness. New York City: Reborn will help turn that vision into reality. Click here to learn more.