Public sector union advocates pushing for state pension reform saw a victory in this year's state budget.
They say previous reforms that took place in 2012 under then-Governor Andrew Cuomo gutted some of the benefits that attract people to public service in the first place. This budget cycle, they achieved part of a push to make benefits for Tier 6 employees, hired after those reforms, look more like those hired as part of Tier 4.
Critics of Tier 6 argue that employees in public service who entered under that designation have received less benefits and security than previous generations doing the same work.
“It sounds like a small change or insignificant, but for folks who work in the public sector this is going to be extremely meaningful,” said Melinda Person, President of New York State United Teachers.
Along with extending a pandemic era policy determining how overtime factors into an employee’s pension until 2026, the final average salary used to calculate benefits has been changed to reflect the three years when an employee’s earning’s were highest, rather than the prior policy of five years.
“As you progress through your career, your salary presumably goes up each year, by calculating it on the last three years of your salary instead of five it will be thousands of dollars in additional money in your pension,” she said.
Person argues that for a teacher who works in the Capital Region, that could be the difference of $100,000 over 30 years of retirement if that retirement started at age 55, something that is also being pushed for Tier 6 members.
The change, she says, will benefit more than just teachers.
“This is a pension tier that impacts all state employees, local employees as well. What we have seen since Tier 6 was enacted is that it has been harder and harder to recruit people into public service,” she said.
The reforms have drawn widespread support from both sides of the aisle, and other unions like the Civil Service Employees Association, and the Public Employees Federation have applauded the move.
But not everyone is on board.
Ken Girardin, director of research at the Empire Center for Public Policy, blasted the reforms as unnecessary, questioning the argument that recruitment and retention have been impacted.
“New York’s public sector pensions are the most generous retirements available to anyone in the state; no one else has retirements that are guaranteed by the taxpayer,” he said.
Citing data provided to the Empire Center by the New York State Comptroller’s Office, he also argues that the concerns that resulted in those pension reforms back in 2010 and 2012 haven’t gone away in the years since.
“Pension costs were getting out of control,” he said of the time period when reforms took place. “Pension costs for taxpayers went from about $1 billion in 2000 to $10 billion in 2010, and they continued to climb for several years even after the reforms.”
But Person says labor advocates will continue pushing for full parity with Tier 4, or as close as they can get. Next on the list, she said, will be addressing contribution rates.