State looking at raising retirement age from 62 to 65, eliminating 'pension padding'
ALBANY, N.Y. (Reuters) — New York Governor Andrew Cuomo plans to soon introduce a bill that would create less-generous retirement benefits for newly hired state workers to save US$93 billion over the next 30 years, according to a source briefed on the proposals.
If enacted, it would be at least the sixth time the state has used such a method to compress pension benefits; New York already has five tiers of increasingly less costly benefits.
Cuomo's proposals would raise the retirement age from 62 to 65 and put an end to "pension padding," a practice that lets senior workers pile on overtime in their final years to increase retirement payouts.
New York's public pension system "is unaffordable for local governments (and) it is unaffordable for state government," Cuomo told reporters on Monday on Long Island.
New York's US$132 billion pension fund is in much better shape than many of its peers because it is fully funded, but its costs are soaring. The Empire Center, a fiscally conservative think tank, said employer contributions to the state's and New York City's separate funds rose from about US$1 billion in 2000 to US$17.3 billion last year.
New York's last round of pension reforms, enacted in 2009, are expected to save more than US$30 billion over the next three decades. They will limit the amount of overtime used to set pension benefits and raise the penalty for early retirement and the amounts that state workers contribute to their pensions.
But some fiscal monitors say they are only stopgap measures that will not correct the problem.
State law requires taxpayers to make up for shortfalls in the state pension fund, and the recession forced many localities to increase already sky-high property taxes.
Cuomo says he wants to cap annual property tax hikes to impose fiscal discipline. Critics say a cap would be ineffective, or even catastrophic, if it is not coupled with relief from pension bills and other costly unfunded mandates.
While Cuomo's pension proposals mirror efforts by some of his counterparts in other states, the first-year governor has stopped short of attempting to limit collective-bargaining rights, a strategy taken by executives in states including Wisconsin and New Jersey.
Cuomo has threatened, however, to lay off 9,800 public workers this year if the unions don't concede US$450 million in savings. Union leaders have panned his pension proposals and said they could complicate ongoing labor negotiations.
"The governor does not care about the impact of his policies on working people," the president of the Civil Service Employees Association, Danny Donohue, said in a statement.
The leadership of a small law-enforcement union reached a tentative accord with Cuomo last month, but its rank-and-file members last week overwhelmingly rejected the pact, which included a three-year wage freeze and increased healthcare contributions.
The CSEA and the Public Employees Federation, the state's two largest unions, have rejected similar offers.
