Fernando and Amanda \u00c1lvarez teach across the hall from each other at P.S. 72 in East Harlem, but they are facing a big gap as they plan for their golden years. A 2012 change to the state\u2019s pension policy means Amanda will have to work an additional nine years to receive a pension similar to Fernando\u2019s.<\/p>\n
They were two of more than 10,000 public employees who spent Sunday at a massive rally in Albany. Their goal: to \u201cFix Tier VI,\u201d a reference to the 2012 pension law change. Unions argue doing so is a matter of fairness, and will help recruit and retain employees. Lawmakers and unions are still negotiating the potential pension tweaks, but any modifications would cost the state and local government billions of dollars over time.<\/p>\n
The state\u2019s top politicians, including Gov. Kathy Hochul, say they\u2019re open to changing the policy as part of the state budget due March 31. There are few opponents, and people who a decade ago warned of the cost implications are keeping quiet now: Groups representing municipal leaders have no position, and many Republican lawmakers in the legislative minority said they\u2019re supportive.<\/p>\n
Assembly Speaker Carl Heastie, a Bronx Democrat, was fiery in his Sunday speech.<\/p>\n
\u201cI have been one of the biggest advocates of trying to get rid of Tier VI,\u201d he said. \u201cWe started to whittle away at some of the changes, but this is the year we need to blow that shit away.\u201d<\/p>\n
The \u00c1lvarez family illustrates what\u2019s at stake. Fernando is part of Tier IV, which covers public employees hired between 1983 and 2009. Employees contribute 3% of their salaries to the pension fund for the first 10 years of work, then nothing afterward. If he works 30 years, he can retire at age 55 with 60% of his final average salary, calculated based on his earning years.<\/p>\n
Amanda is several years younger than Fernando, and she started teaching two years after he did. She is part of Tier VI, which passed in the aftermath of the Great Recession. Employees like her contribute between 3% and 6% of their salaries to the state pension fund for the duration of their employment. To get a 60% pension, she will need to work for 32 years \u2014 but she faces a penalty that will cut her retirement earnings in half if she stops working before age 63.<\/p>\n
\u201cWhen we’re discussing retirement, we’re discussing where we’re going to live and what should we do. \u2026 It’s just so sad to know that I’m going to spend time without her,\u201d Fernando said.<\/p>\n
New York\u2019s government pensions are managed by several centralized funds. They invest the contributions of government employees and their employers \u2013 which include cities, towns and school districts. The required employer contribution is low when the financial markets are booming. But when the stock market tanks, employers are required to make up the difference and rates rise.<\/p>\n
That\u2019s what happened in the first decade of the millennium. New York City Mayor Michael Bloomberg led municipal leaders from around the state<\/a> calling for relief. The billionaire mayor said the city was on track to pay more for pensions than police and fire protection.<\/p>\n \u201cIf nothing is done, cities and counties are going to face even more severe budget cuts and tax increases \u2014 or both,\u201d he said in 2012.<\/p>\n Because Tier VI required more contributions from employees and reduced the benefit levels, the pension fund\u2019s long-term costs went down. A record run on Wall Street has helped keep payments in line; New York state projects it will contribute $3.4 billion to the pension fund this year out of a $260 billion spending plan.<\/p>\n \u201cYou want to be very careful,\u201d he said. \u201cIf you do have a shock to the market or a period of recession or under-performance, you’re only going to sock the taxpayers even more.\u201d<\/p>\n The unions don\u2019t have a specific piece of legislation that captures their requests, but generally they want to lower member contributions and decrease the retirement age.<\/p>\n But that ambiguity is strategic, said Ken Girardin, a fellow at the fiscally conservative Manhattan Institute. It means there isn\u2019t a formal cost estimate for the proposals, which is required of all legislation that changes pension benefits.<\/p>\n \u201cPeople want to retire sooner and pay less toward their retirement. Either of those things can happen only if you shift enormous costs to taxpayers,\u201d he said.<\/p>\n