published a report<\/a> detailing how law enforcement officers in Suffolk County and the State Police had boosted their pensions by significantly increasing their overtime in their final three years of service.<\/p>\n\u201cI don\u2019t think that there was much of a case that this was needed,\u201d Hammond said. \u201cState employees, local government employees, already have pensions that are very generous by the standards of average Americans. They\u2019re already allowed to retire earlier than most Americans, and they have a guaranteed pension that\u2019s a large percentage of their salary. \u2026 And\u00a0the claim that this is a way to improve recruitment, I mean, I suppose it has a marginal effect, but if you were really focused on recruitment, you\u2019d be focused on salaries, not pensions.\u201d<\/p>\n
Here are some of the major highlights of the changes to Tier 6, which applies to state and local employees hired since April 2012.\u00a0<\/p>\n
Teachers can retire earlier\u00a0<\/p>\n
Teachers in the New York State Teachers\u2019 Retirement System, as well as those enrolled in the retirement system in New York City, who are in Tier 6\u00a0would be able to retire at age 58 with 30 years of service. The previous age was 63.\u00a0<\/p>\n
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Changes in contributions\u00a0<\/p>\n
The bill also restructures employee contribution rates for Tier 6 members across several retirement systems.\u00a0<\/p>\n
The current law generally requires contribution rates ranging from 3% to 6%, depending on salary levels.\u00a0<\/p>\n
Beginning Oct. 1, members earning $75,000 or less would contribute 3% of wages. Those earning between $75,000 and $100,000 would contribute 4%. Those earning between $100,000 and $125,000 would contribute 5.25%, and those earning more than $125,000 would contribute 5.75%.\u00a0<\/p>\n
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Those contribution-rate changes would apply across a wide range of retirement systems, including state and local employees, as well as police and firefighters.\u00a0<\/p>\n
The bill modifies the definition of \u201cbase wages\u201d used in contribution calculations. It provides that base wages include regular pay, shift differential pay, location pay and increased hiring rate pay. It excludes overtime payments during specific periods through 2028\u00a0\u2014 and it was not immediately clear why that pause was added to the legislation.\u00a0<\/p>\n
The bill also changes employer contribution obligations for the State University of New York System and City University of New York, community colleges and educational optional retirement programs. For those workers, beginning Oct. 1, their contribution rates would increase from 8% to 9% during an employee\u2019s first seven years. It would increase from 10% to 11% thereafter.\u00a0<\/p>\n
The changes would apply to employees enrolled in the education department optional retirement program, state university optional retirement program and the board of higher education optional retirement program.\u00a0<\/p>\n
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Overtime changes\u00a0<\/p>\n
The bill increases the statutory overtime ceiling beginning Jan. 1. For many members who joined on or after Jan. 1, 2010, overtime ceiling would become $30,000 annually and would thereafter increase by 3% each year.\u00a0<\/p>\n
The bill changes how overtime can be included in pension calculations. Under current law, overtime earnings above 15% of annual wages are excluded from final average salary calculations. The bill increases the cap to 25% for members retiring on or after Jan. 1, 2027\u00a0\u2014 a cap that will still allow pensions to be boosted significantly.\u00a0<\/p>\n
This would likely impact employees whose pensionable earnings rely on overtime, including police officers, firefighters and correction officers.\u00a0<\/p>\n
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When will these changes take place?\u00a0<\/p>\n
Most changes take effect immediately but there are a handful of exceptions.\u00a0<\/p>\n
Contribution-rate changes largely take effect Oct. 1. Overtime changes will kick in this January.\u00a0<\/p>\n
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