Gov. Andrew Cuomo had a bill signing today with New York City Mayor Bloomberg and local elected leaders to sign into law his pension reform deal crafted with the state Legislature this week.
Cuomo estimates that the measure will save local governments and New York City $80 billion over 30 years. His initial proposal was to save them $113 billion.
Cuomo had to scale back his proposal to get it passed by the Legislature, particularly his plan to offer a 401(k)-type option to union workers. The unions beat it back, and Cuomo ended up with a 401(k) option for non-union workers making more than $75,000 a year.
“For years rising pension costs have spelled disaster for local governments across the state. That finally changed this week, as we came together to put in place a bold pension reform plan that will save taxpayers more than $80 billion over the next three decades,” Cuomo said in a statement.
Local governments estimate their pension costs have grown from $1.4 billion to $12.2 billion over the past decade.
Bloomberg and local leaders, including Rockland County Executive Scott Vanderhoef and White Plains Mayor Thomas Roach, were in attendance at the bill signing. Vanderhoef said the measure won’t provide immediate savings for local governments, but would help them long term.
The new pension tier affects new state and local government employees starting April 1.
Here’s some of the highlights:
—Higher employee contribution rates based on salary, starting at $45,000.
—An increased retirement age from 62 to 63. Cuomo initially wanted 65.
—Final pensions for those who work 30 years will be 55 percent of their final average salary, rather than 60 percent. Employees will be vested after 10 years of service.
—Any changes to pensions in the future—such as pension sweeteners that have been commonplace in recent years—would have to be approved by the governor and the mayor of New York City and be “pre-funded” by the state so the costs aren’t borne by local governments.
—Final average salary in calculating pensions will be five years, instead of currently three years. Overtime in calculating pensions would be capped at $15,000 plus inflation for uniformed officers in New York City and uniformed employees outside of New York City would be capped at 15% of base pay.
—The amount of sick days and leave days that can be used to bolster a worker’s pension was reduced from 200 to 100 days.
—New highly paid employees would have their salaries for pension calculations capped at the governor’s pay of $179,000.