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February 22, 2012


Debating Pension Reform

Tim Hoefer

E.J. McMahon debated former state Assemblyman Richard Brodsky last night on a segment of “Capital Tonight.”

The lead up to this debate includes Governor Cuomo’s proposed modifications to the pension system in New York (including his proposal for an optional defined-contribution system), our paper released last week on the same subject and PEF president Ken Brynien’s recent comment that, “If the governor’s going to put something in the budget that’s unreasonable, maybe it should be shut down.”

The debate really gets going when Brodsky says, “E.J. is starting with wrecking the current sytem, instead of curbing the abuses and that’s where I differ with him.”

E.J. responds, “It does not wreck the current system, it does not hurt the current system in any way — that’s a fact.  People who say that it does are just wrong.  We have our major pension systems in New York… are quote, unquote fully funded. That means what it says, it means that if people don’t go into those systems they’re not being deprived of funds.

Opponents seem to have developed an incredibly selective memory when it comes to the optional part of this plan.

12 Comments »

  1. Brodsky is nothing but a Union Shill !!! And the Taxpayer gets to Pay for everything.

    Comment by eatingdogfood — February 22, 2012 @ 6:18 pm

  2. Brodsky needs to get his head out of the sand. Taxpayers are fed up with the present system, and want releaf. Tomorrow is already to late.

    Comment by Tony — February 22, 2012 @ 7:05 pm

  3. Brynien was an idiot for saying what he was saying. He certainly gives you fodder EJ - I’ll give you that.

    However, let’s talk turkey about pension costs.

    If I’m not mistaken, you’ve been advocating that we should see a plan more like the TIAA-CREF model. OSC pegs the long term ECR for the of the current Tier V at 7.9% for ERS members if I remember correctly. At the same time, under a TIAA-CREF type option, the long term ECR for a 30 year employee is about 11.5%. Why is it wise to go that route if the long term ECR for the current plan is less than the long term ECR for the DC plan? Even if we were to go with Cuomos plan, the long term ECR for the DC plan is STILL 8% - making it slightly higher than the cost of the current Tier V. So I fail to see where either will save any money over the long term.

    Yes, I’m aware that costs are projected to rise a bit more before falling. But as the annual ECR is determined by a 5 year rolling average and the costs of the recession are about to fall out of that average in another year or two, the issue is short term.

    I can see a need for an optional DC plan. I realize that there are many people who come into civil service who have no intention of making a career out of it, and a portable plan would be of far more benefit for them. Personally, I would propose the following:

    Firstly, tweak Tier V to eliminate pension padding completely. Tier V went a long way to resolve the issue - especially when it comes to public safety officials who were still being hired into Tier II of the PFRS, but I see no issue with eliminating the use of voluntary overtime completely from the final average salary calculation. If I’m not mistaken, NYC still hires NYPD and FDNY into Tier II, and that should also be resolved.

    Then, go ahead and offer an optional DC plan alongside the newly tweaked Tier V. While Cuomos plan would cost slightly more and the TIAA-CREF type option a bit more than that, I would agree that a plan that more closely follows TIAA-CREF would be more prudent as the DC option.

    By offering both plans like this side by side, doesn’t this make everyone happy instead of making a completely new pension tier where the DB plan is effectively useless?

    I understand the costs of public safety workers pensions are far higher than those of rank and file civilians even if pension padding is removed from the equation, but those issues can and should be addressed separately, because frankly, do we want a 60 year old trying to drag us out of a burning building? As a taxpayer, I’m OK with allowing those folks to retire a bit earlier if it means having younger guys on the job. Additionally, I see it as a separate issue because they already are in their own plan as it is, and their costs do not equate to the costs for the rank and file.

    We usually disagree on just about everything EJ, however, I would be interested in hearing your comments on my suggestion on combining an tweaked Tier V with your TIAA-CREF idea, because I think that might just be mutually acceptable for all.

    Comment by Darth Stateworker — February 22, 2012 @ 7:27 pm

  4. Oh Yeah, its time to TWEAK the System !!! This is TAXPAYER Money !!! Get Rid Of All These Pensions that are BANKRUPTING the States and the Taxpayers !!!

    Comment by eatingdogfood — February 22, 2012 @ 9:04 pm

  5. Do you have anything constructive to add eatingdogfood? I made some cogent points. You resorted to the typical “bankrupting” hyperbole heard all too often from conservatives. In fact, it’s a bit heady, but you’ll note I point out both DC plans actually look like they will cost MORE long term based on actuarial reviews and the known contribution structure for TIAA-CREF. Ignoring those points to use the “bankruptcy” hyperbole is nothing more than cognitive dissonance.

    Comment by Darth Stateworker — February 22, 2012 @ 9:34 pm

  6. The Private Sector is no longer going to support the Lavish Lifestyle’s that the Public Sector believes that they are entitled to. Observe if you will, the decrease of Working People who pay Obscene Taxes in the Private Sector and the increase of illegal aliens in NYS. NYS will lose 2 Congressional Seats this election cycle. Since 1980, NYS will have lost 12 Congressional Seats. This is simple math, not cognitive dissonance. Seven States have one Congressmen. Is that the ultimate goal ??? Oh, by the way, Texas is gaining 4 Congressional Seats this election cycle. Have you been to Buffalo lately ??? To quote Maggie Thacher ” The problem with Socialism is that you eventually run out of other people’s money “. In a perfect world, we should all work for the government. Then, we could be just like Greece and pay a $50.00 Toll to go over the Tappan Zee Bridge.

    Comment by eatingdogfood — February 22, 2012 @ 10:51 pm

  7. eatingdogfood:

    You provided no math. You went off on tangents.

    It is a simple question of costs, and perhaps one that is a little above your intellectual plane or knowledge base, because obviously you aren’t grasping the points I made in that the projected long term costs of the DC plans appear to be higher than the long term costs of Tier V even in it’s current form. If you are looking for tax relief so you are no longer “eating dog food”, is raising the cost going to help you in any way, shape, or form?

    Perhaps I should simply wait for EJs response as he’ll at least grasp what I said, instead of attempting to debate with you and wasting my time.

    Comment by Darth Stateworker — February 22, 2012 @ 11:12 pm

  8. ENTITLEMENT WITH AN ATTITUDE !!!

    Comment by eatingdogfood — February 23, 2012 @ 7:23 am

  9. Brodsky and his brothers and sisters in the Legislature have ‘incremented’ the current situation to the point where the public unions are now New York’s elite. They view Triborough like a lightning rod and refuse to touch it. And why not?? Anyone checking the lobbying websites will find that, following the Legislature legalizing it’s own bribery - and joining our nation’s Supreme Court in making a mockery out of the term ‘legal’ - those unions, particularly NYSUT, have been co-opting legislators by lining their pockets lavishly.

    Our public schools used to teach that such actions existed only in ‘banana republics’; now New York citizens have their very own!

    Comment by Livewire — February 23, 2012 @ 8:56 am

  10. The Syracuse Newspaper had a great article this past week on state employees working 80 hour work weeks, making $100,000 +, to bolster their pension plans sky high. This is disgusting. Overtime should not be a part of your pension plan money. Corruption continues…

    Comment by Sue — February 23, 2012 @ 11:33 am

  11. State employees, eh Sue?

    About 14/100th of 1% of all pensioners in the ERS have pensions over the $100k mark. 456 pensioners out of 313595 based on 2010 pension data. Boy, that sounds like an EPIDEMIC.

    You are more than welcome to verify that by taking a gander at the information on SeethroughNY, a review of which is what shows this information.

    Comment by Darth Stateworker — February 23, 2012 @ 12:41 pm

  12. To add a bit more to that Sue:

    About 1% of all ERS pensioners have pensions over $70k. About 3% have pensions over $60k. About 5% have pensions over $50k. About 10% have pensions over $40k. About 20% have pensions over $30k.

    That really doesn’t help your narrative much.

    Comment by Darth Stateworker — February 23, 2012 @ 12:57 pm

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