State may stick to usual pension changes

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Gov. Andrew Cuomo speaks at Molloy College. (Feb. Gov. Andrew Cuomo speaks at Molloy College. (Feb. 2, 2012) Photo Credit: Newsday / Alejandra Villa

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Dan Janison Melville. N.Y. Tuesday January 26, 2010. Daniel Janison,

Dan Janison has been a reporter at Newsday since 1997, initially as a staff writer for the New

Budget makers seem likely to deem this a good moment to think inside the box when grappling with pension costs.

After all, union opposition is strong to Gov. Andrew M. Cuomo's relatively outside-the-box bid to let future public employees choose retirement-savings plans in place of traditional pensions.

Cuomo even semi-ironically referred to himself as "Gumby" Monday to show his flexibility toward reaching a deal with legislators on alternative ways to save.

Much has been made of Cuomo clashing with Comptroller Thomas DiNapoli over what needs to be done about big local pension burdens, and how quickly, and over the advisability of this new "defined-contribution" option.

Amid the debate, one thing appears clearer: Any changes in the standard state pension deal seem likely to be found within the state's current array of public retirement systems.

That is, changes for future employees seem most likely to be negotiated sooner or later from inside the existing box with its many replaceable components.

We could be talking here about raising retirement ages above the current 62. Or hiking employee contributions, or lowering percentage payouts. Or there could be a combination of the three, along with other parts of Cuomo's current proposal.

Decades worth of history of enacting slimmer pension tiers shows how loose -- in fact, how Gumby-like -- these pension deals can prove to be over time.

During the Paterson administration, Tier 5 took effect for employees hired on or after Jan. 1, 2010 -- with the aim of saving billions of dollars in long-term costs. Among its changes, it imposed a minimum retirement age of 62, a 3-percent employee contribution for all years of service, and a 10-year vesting period.

But consider this: The previous pension level, Tier 4, took effect in September 1983, also in response to a fiscal squeeze, also had among its provisions: Minimum retirement age of 62, 3-percent employee contributions for all years on the job, and a 10-year vesting period.

Wait, you may ask. What was the change?

Well, in the 26 years between enactment of these tiers, state elected officials enhanced benefits to retirees from the original Tier 4 template. So by the time Tier 5 came along, Tier 4 minimum retirement age had become 55 after 30 years' service, employees paid 3-percent contributions for only the first 10 years, and vesting took only five years, as previously noted by the Empire Center for New York State Policy and others.

For his part, Cuomo was not so single-minded as to limit his pension proposal to defined-contribution plans -- which accounts for a relatively small share of the projected savings. He often includes in talks some proposals expendable in a final deal.

His Tier 6 proposal -- again, for future employees -- has elements with a better chance to make it into law, at some point, in some form.

These include: Retirement at 65, vesting after 12 years, per-year percentage decreases in pension benefits, and no early retirements.

Those are realistic prospects to watch as the drama plays out.

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