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March 14, 2012


Unions throw fit on cue despite scaling back of Tier 6

E.J. McMahon

Based on initial reports of Governor Cuomo’s pension deal with the Legislature –no defined-contribution option,* more marginal changes in other benefit levels for traditional defined-benefit pensions– the union reaction is absurdly (if predictably) over the top.  From the Albany Times Union blog:

“It’s gotta be the biggest slap in the face of labor. It’s incredible,” said NYSUT Executive Vice President Andy Pallotta. “The governor has championed this and he wouldn’t let it go, so this is now something where national labor is focused on the Democratic governor of the state of New York.”

“You don’t have to look further than the New York State Capitol to find a governor who is anti-labor,” he said. “We were at the table until they decided to jam us with this.”

“They chose political protection for themselves over retirement security for thousands of working families across the state,” said Brian McDonnell, legislative and political director for the American Federation of State, County and Municipal Employees in New York.

Offering future workers an ironclad, taxpayer-guaranteed, state tax exempt, partially inflation-indexed pension of about 53 60 percent of final average salary at age 63 after 30 years on the job is a choice against “retirement security for working families”?  On what planet?

* There are also reports that the deal may include some sort of defined-contribution plan for non-union employees earning incomes of more than $70,000 or $80,000.  Without details, this is impossible to evaluate.  If it’s the same DC plan Cuomo offered in his original Tier 6 proposal, it’s a bad model.  If it’s more like the SUNY plan, it will be more attractive to the limited number of eligible employees (of which there will not be many, especially if this report is true).

But it won’t change the fact that Tier 6–or whatever they end up calling it–was a big missed opportunity to begin truly transforming the public retirement system in New York, mainly because Cuomo never seriously pushed the DC option that was the sole significant structural change in the plan. Indeed, he seems to have preemptively surrendered it weeks ago — around the same time he began inviting the Legislature to consider how pension benefits might be increased as soon as the economy improved.

Oh, and … tough luck, teachers.  You still don’t won’t have the same retirement plan choice as college professors.

Filed under: Public Pensions

3 Comments »

  1. I’m not sure how you can say there will not be many people eligible for a DC plan if it is for non-union employees earning incomes of more than $70-$80K. The State is loaded with them.

    Comment by Country914 — March 14, 2012 @ 10:59 pm

  2. Yeah, It sure looks real bad for the Democrats. The Unions are definitely maybe going to Vote Republican ??? Ya Think ??? I got a Bridge to Sell You in Brooklyn.

    Comment by eatingdogfood — March 15, 2012 @ 8:13 am

  3. Two points…..
    1) the pension is not completely free from NYS tax…. the portion contributed by employees has NYS withheld from it up front. Otherwise, pension benefits are free from NYS tax if you remain in NY after retirement or if you live in a state w/o an income tax. If, post-retirement you live elsewhere, you pay state income tax on your pension benefit, only not to NY.
    2) What kind of political nonsense is it to have a DC plan imposed only on non-union employees earning above $70k but not on ALL employees? Is this another Cuomo sop for the unions?

    Full disclosure: I recently resigned from a NYS union. The straw that broke the camel’s back was its shameless support of Occupy Wall Street.

    Comment by SG — March 15, 2012 @ 11:18 am

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