Current Issues Affecting Our Retirees - 2012

Cuomo panel backs new pension tier for N.Y. state
By Robert Steyer
Published: March 3, 2011

A commission has proposed that New York state create a new tier of pension eligibility in which new employees in defined benefit plans would pay higher employee contributions and for whom minimum retirement ages would be raised.

In addition, overtime would be excluded in pension calculations, and employees would have to work longer before qualifying for a pension.

The Mandate Relief Design Team offered no details about the proposed new pension tier in its preliminary report that was delivered to Gov. Andrew Cuomo on Tuesday. Changes in the pension system represented only one element of the report from the commission of private- and public-sector representatives that was created by the governor in January.

The commission recommended a new pension tier, called Tier 6, “in order to help municipalities and school districts address their rapidly escalating pension costs,” according to the preliminary report that is available on Mr. Cuomo's website at www.governor.ny.gov/assets/documents/finalmandate.pdf

The report said the estimated savings for the Tier 6 pension-level proposal for the local governments and school districts would be “nearly $50 billion” over 30 years.

The report noted that in 2009, New York State enacted a new, Tier 5 pension level for new employees in state and local governments outside of New York City and for teachers statewide. “Over the next 30 years, Tier 5 is expected to save local governments and schools $26.6 billion,” the report said.

“Although Tier 5 will produce savings for municipalities and schools, the amount of pressure that pension benefits place on municipalities, school districts and the property tax call for additional reforms,” the report said.

“Decade after decade, mandates have been piled on local governments and school districts, straining budgets and increasing pressure on taxpayers,” Mr. Cuomo said in a news release. “This is a good first step in helping cities, towns and villages across New York rein in costs and help taxpayers, and I look forward to additional findings throughout the year.”

New York's pension system has a series of tiers, offering different benefits and imposing different requirements on employees depending on when they were hired. For example, the first tier covers all employees hired before June 30, 1973. Tier 5 covers employees hired after Jan. 1, 2010.

- Contact Robert Steyer at rsteyer@pionline.com

Gov rips union man DiNap on pensions
By ERIK KRISS in Albany and CARL CAMPANILE in NY
Last Updated: 4:45 AM, February 17, 2012
Posted: 1:01 AM, February 17, 2012

Gov. Cuomo tore into state Comptroller Tom DiNapoli yesterday, accusing his fellow Democrat of carrying labor unions’ water by criticizing his efforts to reduce pension costs.

“I think the comptroller is 100 percent wrong in opposing pension reform,” Cuomo said on Albany’s Talk 1300 AM radio. “I believe it’s indefensible. It argues the positions of the labor unions at the expense of the taxpayer and the citizen, and I even think it’s wrong for the labor unions.”

Cuomo has proposed offering future public employees a choice between a 401(k)-style “defined contribution” plan or a “defined benefits” option less generous than current plans.

'I think the comptroller is 100 percent wrong in opposing pension reform.'  - Gov. Cuomo on Tom DiNapoli’s stance against defined contributions “To make it sound like, well, this is reckless. I totally disagree with him as a matter of policy,” Cuomo said of DiNapoli.

Cuomo has said his proposal would save the city, state and other localities $113 billion over 30 years.

DiNapoli has not weighed in specifically on Cuomo’s pension-reform proposal.

But yesterday he reiterated his position, supported by labor unions, that “a defined contribution plan, replacing a defined benefit plan, is a more costly and less effective option to provide retirement security.”

Meanwhile, a Citizens Budget Commission analysis endorsed Cuomo’s pension overhaul.

Too much of the cost of the current state and city pensions are borne by taxpayers and too little by the workers, the business-backed CBC said.

New York’s state-run pension system made 89 percent of the total contributions and workers just 11 percent — a ratio of 8 to 1, compared with the national average of 2 to 1 for other states. That’s the second highest rate among the 10 largest state-run pension systems and the sixth highest nationally.

The disparity was no better in New York City, where taxpayers cover 87 percent of pension costs.

“One of the significant disadvantages of the relatively low employee-contribution rates in New York state is that almost all the downside risk from market downturns and the Legislature’s tendency to ‘sweeten’ pension benefits is borne by employers and ultimately taxpayers,” said the CBC’s Elizabeth Lynam and Melinda White.

Cuomo’s Tier 6 “defined benefit” proposal would raise the retirement age for new government workers from 62 to 65, lengthen their vesting period to from 10 to 12 years and require employee contributions ranging from 4 to 6 percent, up from the current 3 percent maximum.

Those who choose the 401(k) option would vest within a year and could take their plan with them if they go to the private sector.

The plan is part of the budget Cuomo submitted last month.

ekriss@nypost.com

NYS AFL-CIO (Tier 6 rollback of retirement security) - www.nysut.org
NYS AFL-CIO - February 7, 2012

• AFL-CIO.pdf

NYS Public Employees Federation - www.pef.org

• Comptroller Tom DiNapoli is doing his job.pdf

Study Commissioned by Empire Center for NYS Policy - www.empirecenter.org

• Report for NYS&LRS

* DISCLAIMER--The Port Authority Retirees Association, Inc. does not provide, and this notice does not constitute, legal or other professional advice.  We recommend you contact your own professional advisor for such matters as neither The Port Authority Retirees Association, Inc., nor anyone associated with this notice, assumes responsibility for your relying on the information provided, even though we have attempted to ensure that it reflects our understanding of what is presented.