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May 28, 2024
Gov's $93B retirement plan Tier 6
Posted On: May 17, 2011

Gov's $93B retirement plan

By BRENDAN SCOTT, Post Correspondent

Last Updated: 3:02 AM, May 17, 2011

ALBANY -- Gov. Cuomo vowed to defuse the state's pension time bomb yesterday as administration officials for the first time detailed sweeping plans to save billions on government retirements by cutting benefits and hiking employee contributions.

The new, less-generous pension tier for new workers would slash public-sector pension expenses by $93 billion, or nearly a third, over the next 30 years, sources said -- more than twice the savings promised by a similar overhaul two years ago under former Gov. David Paterson.

The plan would increase the minimum retirement age from 62 to 65 and require municipal, state and uniformed workers to contribute twice as much for their pensions. It would end early retirement, cap payouts for some high rollers and ban common tricks used to "spike" their pension calculation with lots of overtime just before they retire.

Cuomo refused to give details during a stop on Long Island yesterday but pledged to formally unveil his "Tier 6" pension plan "in a matter of days."

"We can't afford the public pension system that we have in this state," he said. "We have to reduce pension costs, otherwise we'll never stop the taxes from going up."

Mayors, school officials and other local leaders blame soaring pension costs -- brought on by demographic shifts, Legislature-approved "sweeteners" and investment losses by retirement funds -- for busting budgets across New York.

A recent analysis by the business-backed Manhattan Institute found that the state's pension funds are underfunded by $120 billion and that taxpayers will have to shell out $8.5 billion more annually by 2015 to keep them solvent.

Cuomo's bill would not apply to current state workers, whose pension benefits are constitutionally protected. It also would not affect city cops, firefighters and municipal workers, who have their own retirement system.

Mayor Bloomberg yesterday warned it "would be disastrous" to leave the city out of any pension overhaul and vowed to press the issue when he is in Albany today to lobby for legalized gay marriage.

"The governor has assured me that anything he does will include the city," the mayor told reporters. "He assured me a number of times."

A Cuomo spokesman said the governor supports a similar pension shakeup for the Big Apple and insisted the administration would work with Bloomberg to craft city-centric legislation.

Cuomo's statewide bill would reduce the state's expected $300 billion pension bill by $93 billion over the next three decades.

The plan would require workers to put in 12 years before they qualify for a pension -- up from 10 under current law -- and end early retirement.

It also would double retirement contributions by workers, who now contribute 3 percent of their paychecks to their pensions.

"Padding," which counts overtime, sick time and other time off while calculating pension payments, would be banned.

"The governor does not care about the impact of his policies on working people," said Civil Service Employees Association President Daniel Donohue, whose union represents some 300,000 public employees.

"The governor is engaging in political grandstanding to impress his millionaire friends at the expense of working people and the services they provide to the people of New York."

State and local governments spent $2.3 billion in 2010 -- compared with $284 million contributed by employees -- to support the pensions of more than 1 million current and retired state employees. The average non-uniform retiree collects $18,300 annually, while cops and firefighters draw an average $39,808.

Cuomo's effort comes two years after Paterson created "Tier 5" -- including increased contributions, greater early-retirement penalties and restrictions on overtime "spiking" to save $38 billion over 30 years.

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