Posted by New York state, facing a $3.1 billion deficit and a cash squeeze, deferred a September payment to its $116.5 billion pension fund, forfeiting more than it would have cost to borrow the needed funds, Bloomberg data show.
By delaying the $959.1 million payment, which isn’t legally required until March 1, the state sacrificed an 8 percent annualized discount equal to $6.1 million a month, said Matt Anderson, a spokesman for the Division of the Budget.
“We have been paying in September for at least the past four years and received a discount for the early payments,” Anderson said. The installment will be paid before March, he said.
While New York is capable of selling short-term notes for less than the cost of the 8 percent discount, “we want to instead work together with the Legislature and enact a responsible deficit reduction plan that does not require state borrowing,” Anderson said in an interview today.
The delayed payment causes no harm to the pension fund that covers 1.05 million workers and retirees, “though it isn’t the sort of thing you want to see year after year,” said Comptroller Thomas DiNapoli, the plan’s sole trustee. The fund has assets equal to 100 percent of its liabilities, as calculated by actuaries, he said.
