City Pension Funds Lost Billions; Retirees’ Checks Unaffected
The bad news is that the managers of the city’s pension funds lost $9 billion because of the stock market decline in recent years, leaving the administration of Mayor Michael Bloomberg to increase payments into the system.
The good news is that the pension funds still total in the billions, so retirees don’t have to worry about any decreases to their monthly benefit check for a long time. Besides, the stock market appears ready to start going up again, so the pension funds’ investments in the markets are likely to start paying dividends soon.
The extra money the city must pay into the funds is one of the reasons for the $4.7 billion budget deficit. Administration officials therefore are going to ask the state legislature’s permission to spread the payments out over 10 years or so.
Another problem the city has with the pension funds at this time is that monthly payments are generally increasing. That adds to the payments the city must make into the funds.
The higher monthly pension checks received by retirees result from the Cost of Living Adjustments (COLAs) enacted by the state legislature two years ago. The COLAs give automatic pension benefit increases as the cost of living goes up. The COLAs apply to both city and state pensioners.
Summing up the city’s problems with the pension funds, Robert North, the chief actuary for the city’s five pension funds, stated in a recent news story:
"It comes down to two things: we gave a lot of benefits and we had bad investments. Our benefits went up, our investment income went down, and the place you have to make up for it is in contributions. It is a classic pension funding problem."
MAJOR UNION BLASTED ON Rx BY MAIL: A pharmacist’s organization based in New York state says it will lose $40 million a year in business because a major union, Hospital Workers Local 1199/S.E.I.U. has contracted with a nonunion wholesale pharmacy supplier in Texas to provide its members with prescription medications by mail. No copayment by union members is necessary.
The complaints from the Pharmacists Society of the State of New York have caused Local 1199 officials to reexamine their deal with Advance PCS in Texas. The union is now asking New York-based Rite Aid and Pathmark if they can offer competitive rates.
"We’d love to see them compete in this business," said Dennis Rivera, 1199 president.
More than 100,000 workers, about a third of his members, are involved in the mail program.
Craig Burrage, executive director of the Pharmacists Society, complained about the union working with a nonunion outfit. "Its impact will be felt most when our city cannot afford to lose more jobs or money" he said.
Other unions have prescription mailing plans, but not all with non-union providers and some require a copayment from the member subscriber.
HIKE IN Rx DRUG SPENDING: While President George W. Bush and Democrats and Republicans in Congress haggle over a prescription drug program for seniors on Medicare, spending on prescription drugs zoomed for the fourth successive year in 2001, climbing by 17.1 percent. A small number of expensive drugs led the increase.
Spending on outpatient prescription drugs totaled $154.5 billion in 2001, up from $131.9 billion in 2000, according to the National Institute for Health Care Management Research and Educational Foundation in Washington D.C. The study found that 50 drugs out of 9,482 were responsible for about 60 percent of the spending increase of about $23 billion.
Among the higher-priced drugs were cholesterol fighters Lipitor and Zocor, arthritis drugs Vioxx and Celebrex and an anti-depressant, Celexa.
MEETINGS: AARP Chapter No. 2889 in Elmhurst has scheduled its next meeting for Wednesday, April 17, at 12:30 p.m. at the first Presbyterian Church of Newtown, 54-05 Seabury St., Elmhurst. Seth Lipner will give a talk, "How to Avoid Getting Ripped Off by Your Investment Stock Broker, Financial Advisor and Others."
The following Wednesday, Apr. 24, AARP Jackson Heights Chapter No. 991 will hold a business meeting at 12:45 p.m. at the Jewish Center of Jackson Heights, 37-06 77th St., Jackson Heights. The guest speaker, Rosemary Cola, New York state member of AARP, will update members on various programs and inform them about legislative actions.