New York State has one of the best run and best financed pension systems in the nation. Employer contributions to the system have risen in the past few years due to the damage done to the markets and our nation’s economy in 2008-2009 by the very same Wall Street firms that seek to benefit from these changes to the pension system. Instead of cutting pensions for workers, we should focus on ensuring that corporations and the wealthiest New Yorkers are paying their fair share of taxes.
Governor Cuomo’s Tier 6 pension proposal would cut retirement benefits by 40 percent by reducing the multiplier used in determining benefits from 2 percent to 1.67 percent; raising the minimum retirement age to 65, excluding all overtime from pension calculations and changing the Final Average Salary calculation period from three years to five years. It would also increase the time needed for vesting from 10 years to 12 years. In addition, it would require new employees to contribute from 4 percent to 6 percent of their salary based on how much they earn.
Lastly, the Tier 6 proposal would establish a competing Defined Contribution system that would pull employee contributions out of the Pension system, fail to provide retirement security for those who opt in and turn billions of dollars in administrative fees over to Wall Street in the form of commissions. This despite the abject failure of defined contribution plans to either operate more efficiently or create real retirement security for either public or private sector workers.
We strongly condemn the Tier 6 plan as it would cut pension benefits for new hires by 40 percent and pull billions of dollars out of the State and City Pension systems to turn over to Wall Street financial firms.
Tier 6 is simply unfair to public workers who have already made significant sacrifices.
The AFL-CIO stands with public sector workers in New York in fighting for retirement security and against Wall Street greed.