Long Term Pension Data for New York And New Jersey to 2016: Police and Fire Pensions

In 2016, according to data reported to the U.S. Census Bureau, the New York City Employees Retirement System (NYCERS) had 263,235 active members who were working, and 149,940 beneficiaries receiving periodic benefit payments, a ratio that implies just 1.75 years worked for each year in retirement. And it is much less than that if workers who depart early in their careers and don’t receive pension benefits are excluded. That year, the New York City Police Pension Fund Article 2 and the New York City Fire Department Article 1B Pension fund combined had just 45,047 active members working and yet had 66,374 beneficiaries receiving active pension benefit payments, a ratio that implies a little over two-thirds of a year work for each year in retirement.

In 2016, New York City taxpayers contributed $3.4 billion to NYCERS. NYC taxpayers also contributed $3.4 billion to the police and fire pension funds, the same amount even though NYCERS covered nearly six times as many city workers. According to City of New York budget documents, in FY 2018 taxpayer pension contributions equaled 52.5% of wages and salaries for the NYC Police Department, where most workers are covered by the New York City Police Pension Fund Article 2, and 71.8% of wages and salaries for the New York City Fire Department, with most workers covered by the Fire Department Article 1B Pension Fund. But just 13.0% to 17.0% for the most of the non-uniformed city agencies, with workers covered by NYCERS. What is more, and what is worse, is that the current level of NYC taxpayer pension contributions to the police and fire pension plans are not enough.

This is another in a series of posts on public employee pensions in New York and New Jersey, using data reported to the Governments Division of the U.S. Census Bureau over the decades. Motivated by the ongoing attrition of public services due to soaring public employee pension costs, and the extensive deception swirling around the issue, I downloaded and arranged ALL the data on major New York and New Jersey pension plans reported to the Bureau over the decades, going back to 1957. This year’s posts provide an update through the year 2016. A spreadsheet with selected data on police and fire pensions in New York and New Jersey, adjusted for inflation, and charts is here.

Long Term Police-Fire Pension Charts NYC NJ Etc

What is important to remember is that the current pension plans in this spreadsheet replaced other, previous pension plans that were under-funded and overpromised. Those plans were closed, and then ran out of money before all their beneficiaries died, forcing taxpayers to fund benefits directly out of state and local budgets, in addition to contributing to the new plans. Among the closed plans are the New York City Police and Fire Pension Plans Article 1, which had zero assets but $64.6 million on benefit payments ($464.2 million in today’s money) in 1967, when the City of New York was going broke. And a host of local pension plans in the rest of New York State and New Jersey.

So Generation Greed isn’t the first to shift the cost of its public employee pensions to the generations to follow, but it has repeated the trick all around the country. What is different about Generation Greed is that instead of shifting costs to richer generations to follow, it has shifted costs to poorer generations to follow, from its “youth power” days through decades of Sex, Drugs and Rock and Roll right on to the election of Donald Trump. In New York City, this generation’s values expressed itself in a high level of police and fire department disability fraud.

With very few of those participating caught, and very little of the cost recovered. That is one reason the cost of NYC police and fire pension plans is so high.

The other reason is that the pension plans so rich to begin with, with a retirement after just 20 years as early as one’s early 40s. As I noted in this post…


Assuming a police officer or firefighter came on board at age 22 (it could be younger), they could be on their way to a life of leisure at age 42, with 38 years in retirement on average at half pay after just 20 years of work. Based on the police officer salary scale I could get off the NYPD website in 2010, that would require $686,247 to be socked away by the time of retirement, which would require 29.6% of payroll to be put away during a police officer’s career. That is without any pension spiking through overtime worked in the last year on the job, on which the annual pension benefit is based, no late career promotions, which also increase pension benefits, and no disability pensions, which increase benefit payments to 75.0% of the last year’s salary rather than half.

Moreover, that approximately 30.0% of pay would have to be put in consistently, with funding in advance allowing decades of investment returns. Catching up, given how many years in retirement are promised, is nearly impossible. The only way out would be, once again, for taxpayers to fund the full cost of pension benefits out of the city budget, at the expense of other things, to allow the pension funds to recover.

Unfortunately, that is the situation the City of New York and its people are in now, once again.   According to the Center for Retirement Research, in 2015 the NY State & Local Police and Fire fund was 93.2% funded. (Its data is reported to the U.S. Census Bureau as part of the broader NY State Employees Retirement System). It covers police officers and firefighters in the portion of New York State outside New York City.

But the New York City Police pension plan was only 68.7% funded, and the New York City Fire pension plan was only 59.0% funded. Even though the same New York State legislature sets the rules for al these. The NYC police and fire pension funds were worse funded than the New Jersey Police & Fire pension fund according to this source, at 72.6% funded. Even though NYC taxpayers have paid in far more to its police and fire pension funds than New Jersey taxpayers.

So what about the updated charts?


The first chart shows that annual benefit payments are a high percent of assets for the NYC Police Pension Fund, the NYC Fire Pension Fund, and the New Jersey Police and Fire Pension fund. This ratio implies underfunding, particularly given how young police and firefighters can retire and how many years they may thus collect.   The underfunding goes back a long way for the NYC Fire pension fund, which has had the equivalent of 11 years or benefit payments or fewer in assets consistently over the years – perhaps going all the way back to Mayor Lindsay and the pension increases of the late 1960s.

In, 2016, the most recent year for which data is available, benefit payments equaled 7.0% of the assents in the New York Police Pension Fund Article 2, 10.9% of the assets in the New York City Fire Department Article 1B Pension Fund, and the 10.3% of the assets in the New Jersey Police and Firemen’s Retirement System.   That means the pension plans only have enough assets to pay 14.2, 9.2 and 9.7 years of benefits respectively at the current rate.

As noted in the prior post, in my opinion a mature pension plan should have enough in assets that benefit payments equal just 4.0% of those assets. For the kind of early retirement pensions police officers and firefighters get, one could argue that benefit payments should be an even smaller percent of assets. Those assets ought to be sufficient to pay all of the benefits owed to current retirees, most of the benefits owed to those soon to retire, and some of the benefits owed to younger workers. And given how generous pension benefits are for New York and New Jersey’s police officers and firefighters, that means there ought to be enough money in the funds to pay monthly benefits for decades. There isn’t.

As for the New Jersey police and fire pension plan, benefit payments were less than 2.0% of pension assets in 1977, but that is because New Jersey was a booming suburban area with a relatively small number of retired police officers and firefighters at the time. Extensive assets were needed for the future pension benefits of those who were still working then, but are retired now.


In 1977, the New Jersey Police and Fire Pension fund had 3.16 active members working for every beneficiary receiving periodic payments. As the pension plan “matured” and the state’s population growth slowed, that ratio fell toward that implied by the level of pension benefits – the number of years worked relative to years retired for individual police officers and firefighters. Starting in 2014 the New Jersey Police and Fire Pension Fund had fewer active members working than the number retired.

The New York City Police Article 2 pension fund has had fewer officers working than the number of retirees receiving benefits since 1989, although the huge increase in the force during the early 1990s temporarily increased the ratio of workers to retirees back above 1.0. In 2016, the ratio was 0.7 working members of the pension plan for each retiree. Although New York City’s population was close to its current level in the 1950s, this pension plan had virtually no members receiving benefits until the early 1960s. Prior to that all officers were retired from the New York City Article I Pension Fund, which ran out of money around 1960.

The New York City Fire Department Article 1B Pension Fund had more retirees than workers still on the job as early as 1986, and after once again having more workers than retirees in the late 1980s it had just 0.62 active members still working per beneficiary receiving payments in 2016. That implies an average of 1.6 years getting paid to be retired for every year worked. There is simply no way anyone can get anything like that many years of paid leisure, except at someone else’s expense.


Even adjusted for inflation, the cost of benefit payments for the two New York City public safety pension funds has soared in just the past 15 years. Payments by the NYC police pension fund increased from $1.1 billion in 1996 (in $2016) to nearly $2.4 billion in 2016, more than doubling.

Moreover, the data apparently does not include the extra $12,000 per year “Christmas Bonus” payment every police retiree with a regular (non-disability) pension receives every year in excess of pension benefits earned. More on that later.

The inflation-adjusted value of NYC Firefighter pension payments has also doubled over 20 years, from $600 million in $2016 to $1.2 billion in 2016. This is two decades when the wage and salary income of most workers, who generally don’t get pensions, fell behind inflation.


Police officers and firefighters contributed virtually nothing to their own pensions over the decades, with city taxpayers making the “employee” contribution mandated by these pension plans as they were set up. While officers and firefighters hired before 2009 still have someone else paying to make pension contributions for them, those hired subsequently have been forced to make their own contributions.


Since most active pension fund members were still hired before 2009, however, there hasn’t been much of an increase in employee contributions through 2016. That year NYC police officers contributed about $250 million to the police pension plan, up fro $84 million in 2008, while firefighters contributed $116 million, up from $85 million. Police officers and firefighters in New Jersey contributed $389 million to their own pensions in 2016, about the same as in the prior five years.

Taxpayer contributions, meanwhile, have soared. For the NYC Police pension plan the increase was from about $850 million in 1996 (in 2016 dollars) to about $2.4 billion in 2016. For the NYC fire pension plan the increase was from about $383 million to $1.05 billion.

This huge increase in cost has had a number of consequences. The pay and benefits of new police officers and firefighters has been cut, with staring pay reduced to just $25,000 at one point in the 2000s – reducing the qualifications and motivation of new hires.


Mayor Bloomberg ended up having to fight against the police officer and firefighter unions, which always prefer to screw the newbie, to get that one reversed.


The number of police officers, still nearly three times the U.S. average relative to population, nonetheless fell slightly from about 36,800 active members of the pension plan in 1996 to 34,435 in 2016. The number of active members of the NYC firefighter pension plan fell from about 11,160 to 10,610.

But mostly, the soaring cost of the NYC police and fire (and teacher) pension plans have been absorbed by other agencies, with diminished infrastructure investment and less and less help for the poor and troubled. As another cycle of budget cuts followed by child deaths followed by “reform” hits the Administration for Children’s Services, think of police, fire and teacher pensions as the cause. That cycle has happened over and over again, with every fiscal crisis.


As costly as NYC taxpayer contributions are today, they should probably be higher given the holes these pension plans are in – equal to benefits paid in each year.

The good news is that for the NYC police pension plan, Census Bureau data shows taxpayer contributions have been at least as high as benefits paid since the mid-2000s. Perhaps that is the reason why this plan isn’t deeper in the hole than it already is. The bad news is that the benefit payments as reported to the Census Bureau probably don’t include the extra $12,000 in benefits per non-disabled retired officer, the “Christmas Bonus” from the “Variable Supplement Fund.” I estimate that could have equaled $390 million in 2016. With that included, taxpayer pension contributions would have been only 87.0% of pension benefit payments by the New York City Police pension plan that year.

The worse news is that for the NYC fire pension plan, after briefly rising to around 100.0% of pension benefit payments in 2011 and 2012, taxpayer contributions fell to just 87.4% of benefit payments in 2016. With another $62.3 million (estimated) added to benefits for the $12,000 “Christmas Bonus” for non-disabled former firefighters, taxpayer contributions would fall to 83.1% of benefits paid that year.

For the New Jersey Police and Fire pension fund, taxpayer contributions were just 37.1% of pension fund benefit payments in 2016. Although police officers and firefighters contribute more to their own pensions in that state, this pension fund is nonetheless heading for disaster.

Like members of all public employee pension funds in New York state, retired members of the NYC police and fire pension plans benefitted from the huge increase in pension benefit payments as a result of the 2000 retroactive pension increase. These pension funds have also been drained to pay for the $12,000 per year “Christmas Bonus.”

But there is one other factor unique to these plans that has added to their underfunding – a high level of police officers and firefighters who qualify for a “disability” pension at three-quarter’s of final year pay after 20 years of work, instead of just a regular pension of 50 percent of final year pay after 20 years of work.


Each year from 1983 to 2001 more than 40.0% of retired NYPD officer were receiving disability benefits rather than regular retirement benefits, far above the level typical for other police and fire pension funds. After some well-publicized arrests for organized disability fraud, this percent fell to 32.2% in 2016. As for former NYC firefighters, the percent receiving disability pensions had fallen from 68.6% in 1977 to 51.9% in 1997. It started rising again before 9/11 and has soared since, to 66.7% of all retired firefighters in 2016.

While some degree of disability is expected in these types of jobs, and no one would wish to deny officers injured in the line of duty (or the families of those killed) as much support as they deserve, the massive difference between NYC and other jurisdictions implies something else is going on. Why, for example, at these sky-high levels of purported disability, aren’t the police and fire unions demanding that measures be taken to prevent disabling injuries to their members? And why do the newspapers continue to find former NYC police officers and firefighters, allegedly too disabled to work, holding the same job elsewhere in the country after “retiring” from New York?

Part of the possible fraud is legalized. The New York State legislature, in deals with the unions, has repeated added conditions other than on-the-job injuries that automatically quality police officers and firefighters for disability pensions at 75 percent of final pay. Some, such as lung problems for firefighters, make sense. Most do not, and are unfair. And the legislature keeps adding to them, even as taxpayer pension costs soar.


The remaining six weeks of the state Legislature’s 2017 session is turning into a potential pension and benefit porkapalooza for public-employee unions — and even judges. More than 90 pension- and benefit-sweetener bills have been introduced that could cost state and local governments at least $200 million.  

A bill sponsored by Senate Majority leader John Flanagan (R-Smithtown) and state Sen. Martin Golden (R-Brooklyn) would expand eligibility for increased, three-quarter disability benefits to more NYPD cops, at a cost of about $13.5 million. Golden said officers who risk their lives shouldn’t be denied more generous disability because of an arbitrary cut-off in required years of service. “They put their lives on the line. How could you not give them a disability pension?” said Golden, who chairs a panel that reviews pension and benefits legislation.

Actual disability doesn’t seem to be a requirement.

State legislators from the suburbs, where most NYC police officers and firefighters live, are happy to add more benefits for these suburbanites at the expense of city residents who don’t matter. But the suburbs have a very different attitude when it comes to the New York State pension plan and disability pensions for police officers and firefighters in the rest of the state.


Police officers and firefighters who file injury claims in the Lower Hudson Valley often collect tax-free salaries for years while local municipalities and the state wrangle over who ultimately picks up the tab. More than 15 percent of the state’s first responders end up retiring on a state-funded disability pension. That number is even higher in Westchester, Putnam and Rockland counties, where one in four is awarded the pension after being found too badly hurt to ever work again.

Still not close to NYC.

The Journal News examined thousands of records from more than 70 area police and fire departments, finding that taxpayers in the three counties spent more than $163 million over the past decade to pay injured public safety employees unable to work. That’s enough to cover the salaries of all police officers and firefighters in 13 local departments for 10 years.

The newspaper found that most received full pay while waiting months and even years for the New York state Comptroller’s Office to decide if they should receive the state disability retirement pension. Flaws in the system allow first responders with minor injuries like sprains and twisted ankles to receive the same pension consideration as those with life-altering injuries like gunshot wounds and severe burns. Waiting for a ruling on the retirement is also a better deal financially: The injured receive 100 percent of their salaries tax-free while on disability. There is no limit — other than reaching retirement age — to how long they can stay out while waiting for a ruling from the state.

“Nobody is trying to deny a disabled employee their reasonable rights, but we’re in a situation where retirement benefits for a cop getting accidental disability are so good that it’s worth it for them to try to get retirement rather than go back to work,” Scherer said. “What ought to be a safety net for officers injured in the line of duty, in some cases, has become a retirement goal.”

Again, after some police officers were arrested, the number of new disability retirements from the NYPD fell – though the share of existing retirees receiving disability pensions is still much higher than in the rest of the state.

First responders in the northern suburbs generally don’t face the same level of risk as those in New York City, which has the nation’s largest police force. Yet the NYPD disability retirement rate is about 18 percent — lower than the roughly 24 percent rate in Westchester, Rockland and Putnam.

In Westchester, Rockland and Putnam, firefighters and police officers retired on disability at a rate of 24.3 percent since 1998, compared with 15 percent statewide. Around the state, rates ranged from 5.8 percent for police and firefighters in Syracuse to 12.7 percent for police in Nassau County, and 25.2 percent for Buffalo firefighters and police officers. Several local municipalities had rates higher than 30 percent, including Clarkstown, the second-highest paid police department in the state. More than four of every 10 Clarkstown police officers retiring since 1998 did so on disability.

In New York City, Mayor DeBlasio publicly identified the high level of disability pensions as something the city had to tackle. His solution?


As head of the Uniformed Firefighters Association, Stephen Cassidy spent the last 14 years fighting for more pension benefits for his members. Now he’s running all the FDNY’s pension benefits. Cassidy was appointed executive director of the New York City Fire Pension Fund, a new position established by state funding…Once handled by the FDNY, the New York City Fire Pension Fund will now be its own separate entity and dole out benefit payments to the FDNY’s 17,000 retirees. The fund will also counsel and educate members about the city’s pension benefit options.

Reported without comment, on the assumption that none is required.

Finally, how about the investment returns for these pension funds?


Before 2002 the Census Bureau tabulated pension plan assets by book value, but starting in 2002 market value has been the measure, leading to more reported volatility. Before 2000, New York City pension plans assumed a future 7.0% return on investments. This was increased to 8.0% as part of the 2000 retroactive pension increase, and subsequently reduced back to 7.0% for New York City in 2012. I’m not sure what the assumptions are for New Jersey, but my guess is the assumed future rate of return was at least as high or higher.

So what was the actual return?

Based on Census Bureau data, for the period from 1977 (the first year the Bureau has this data available) to 1995 the average for pension fund earnings for each year divided by pension funds assets as the start of the year was 9.8% for the New York City Police Pension Plan, 9.1% for the New York City Fire Pension Plan, and 8.6% for the New Jersey Police and Fire pension plan.   More than enough to meet the investment goal, with some left over.

But only part of these increases were “real,” the rest just a matter of inflation and the falling value of the dollar.   Inflation averaged 5.4% over these years, but has been far lower since. One has to expect that total pension fund returns will also be lower going forward, for that reason alone. Based on the spread between 10-year U.S. Treasury bills and 10-year Treasury Inflation Protected Securities, the market expects an inflation rate of just 1.7% over the next decade.

Future returns will also be depressed by inflated current asset prices, asset prices that first reached bubble levels during the 1996 to 2000 stock market bubble. Most pension funds reported excess returns over these years, with an average annual return of 13.1% for the NYC Fire Pension Fund and 13.5% for the New Jersey Police and Fire Pension Fund. But the New York City Police Pension Fund only reported an average return of 4.4% for these years, a stunning underperformance.

That underperformance persisted during the 2001 to 2016 period, when the average annual return was reported at 6.7% for the NYC Fire Pension Fund and 5.4% for the New Jersey Police and Fire Pension fund, but just 3.2% for the NYC Police Pension Fund, barely more than the 2.1% average inflation rate.

It is for this reason that I believe the NYC Police Pension fund’s investment returns, and its benefit payments, have been incorrectly reported, with the $12,000 “Christmas Bonus” “Variable Supplement Fund” payments deducted from investment returns rather than reported as benefits. Information collected by the Citizen’s Budget Commission would seem to confirm this.


VSF payments stem from an agreement made between union and City leaders in 1968. As City leaders sought to increase the investment return of the pension funds by diversifying their portfolios, union representatives on boards of the police and fire pension funds agreed to allow investments in equities on the condition that “excess” earnings (that is, those above certain target rates) would be used to provide a supplemental payment for retirees. The supplemental benefits were “variable” each year, determined entirely by the strength of investment earnings: in some years, retirees received a check and in others they did not.

In 1993 the arrangement changed. The payments for police and fire retirees were converted to guaranteed fixed payments set to increase by $500 each year until 2007, when they reached $12,000. Payments for correction officers, which were established at a later date, continue to vary based on investment returns.

VSF balances are maintained with funds transferred from the regular pension funds. The amounts of the annual transfers are based on (1) the performance of the pension funds’ equities portfolio and (2) the accrued value of VSF benefits. If the return on equities is higher than the 12-month average return on 10-year Treasury bond rates, then VSFs receive a transfer of the earnings; this transfer cannot provide for VSF asset balances that exceed the accrued value of benefits for each VSF. If equities’ performance drops below the treasury benchmark, it triggers a “deficit” which needs to be made up in years when market performance is stronger; furthermore, any shortfall in resources to pay benefits must be covered by the City’s pension funds.

And then the shortfall in the pension funds is covered by higher taxes and service cuts for NYC residents.

Of course there is an even worse possibility. That some of that massive underperformance by the NYC Police pension fund is real. If nothing else, you’d think someone would investigate something like this. If police officers, retired police officers, politicians or the wealthy were harmed as a result, perhaps someone would. But since the victims are the serfs, no one seems to care enough to bother.