Pension reform passes in New York
Updated: Thursday, 15 Mar 2012, 8:25 AM EDT
MYFOXNY.COM – A pension reform bill that passed in the New York legislature on Thursday could save taxpayers more then $80 Billion over the next three decades.
The bill had been a major issue for Gov. Andrew Cuomo.
“For years, local governments have struggled to cope with soaring retirement costs, driving up taxes on New York families and small businesses,” Governor Cuomo said.
Pension costs have been exploding in the state and total $12.2 billion in 2012.
The legislation puts in place a new Tier VI pension plan that includes employees contributing to their retirement:
- $0 – $45,000: 3%
- $45,000 – $55,000: 3.5%
- $55,000 – $75,000: 4.5%
- $75,000 – $100,000: 5.75%
- $100,000+: 6%
The new tier impacts only newly hired employees. Existing employees and retirees retain all benefits under the legislation.
The law will increase the retirement age from 62 to 63 for new employees. It will also use an employee’s wage rate over their final five years instead of three years for pension calculations. That is to try to reduce the so-called pension padding.
The number of sick and vacation days that can be used for retirement service credit has been cut from 200 to 100.
Tier VI employees will vest after 10 years of service.
New York City Mayor Michael Bloomberg says the new rules will save city taxpayers $21 Billion over the next 30 years.
“Skyrocketing pension costs have caused fiscal crises in many cities and counties around New York, cutting into local governments’ ability to deliver core services. That’s why mayors and county executives – from both parties, and from every region in the state – came together to support Governor Cuomo’s plan,” Mayor Bloomberg said. “I am grateful to the members of New York Leaders for Pension Reform for their advocacy, and to the leaders and members of the State Legislature for hearing us and taking decisive action.”
State workers unions bitterly fought against the measure and were critical of its passage.
CSEA President Danny Donohue said that Tier VI, “will be devastating to 99 percent of New Yorkers. This deal is about politicians standing with the 1 percent – the wealthiest New Yorkers – to give them a better break while telling nurses, bus drivers, teachers, secretaries, and laborers to put up and shut up.”
“No good will come from this,” Donohue added.