State Comptroller Thomas DiNapoli just released a statement on the Tier VI pension legislation adopted by the Assembly and Senate overnight, saying it would not significantly reduce pension costs for local governments in the short term.
Gov. Andrew Cuomo has said he would sign the bill, which would apply to new state employees only. The retirement age would increase from 62 to 63 and employees would have to contribute more toward their retirement. Cuomo’s office estimated the reduced retirement benefits would save local governments $80 billion over the next 30 years.
DiNapoli said he is glad the changes don’t include giving new employees the option of choosing a 401(k)-style system or the traditional defined-benefit pension. Cuomo had proposed including this option, but it wasn’t in the final legislation.
This is DiNapoli’s statement:
“The agreement reached between the Governor and the Legislature on Tier VI will reduce pension costs for new employees. But this new tier will not significantly lower costs for local governments in the short run. I am pleased that it does not include the inadequate 401k-style plan originally proposed. My office will be reviewing the specifics of Tier VI in the coming days and provide guidance to municipalities on implementation.
“There is no quick fix to addressing rising pension contribution rates driven by the financial market meltdown in 2008-09. Despite strong investment returns and two new pension tiers in less than three years, these rates will likely continue to increase in the near future.
“New York has one of the strongest, most sustainable pension funds in the country because it has been managed and funded responsibly over the years.As State Comptroller, it is my job to ensure that this continues.”