Cuomo to seek changes in public pensions

GOV. Andrew M. Cuomo will soon propose a pension system that would raise the retirement age for newly hired public employees, roughly double the amount they pay into the retirement system and put them into a new category that pays lower benefits, according to union officials briefed on the plan.

Pension costs have become a flash point between unions and governments around the country, as costs rise and states and localities continue to struggle economically. In New York, pension payouts to retirees have grown 20 percent in the past four years: from $6.3 billion in 2007 to $7.6 billion in 2010.

"We can't afford the public pension system we have in this state. Period," Cuomo said in a speech Monday at Hofstra University. "The increase in public pensions has been astronomical . . . It's unaffordable for local governments. It's unaffordable for the state government."

Cuomo's blueprint, which would require approval of the legislature, drew an immediate rebuke from labor. Public employee union officials blasted the plan as a "kick in the teeth" designed to drive workers into "401(k)-style" retirement plans. They also called the possible creation of another pension level as "political grandstanding" since the state implemented a similar one less than two years ago and the results are yet to be seen.

Cuomo said he'd introduce a bill shortly that would reduce pension costs and prevent pension "padding" -- the act of increasing benefits through overtime, and unused vacation and sick days. The proposal would cover teachers and state, county and municipal employees outside of New York City.

Though asked repeatedly, the Democrat declined to provide specifics. Union officials, however, said it would:

Raise the retirement age to 65. Currently, retirement age is 62 for most employees and 57 for teachers; early retirement at 55 is available under certain conditions.

Create a new, less expensive set of pension benefits for new employees.

Demand that workers put in 12 years before being vested in the system, compared with 10 years now for new hires.

Require employees to pay more toward pension plans.

The plan also would offer new employees the chance to enter a new Tier 6 category or select a 401(k)-type savings plan, an idea that drew the ire of the Civil Service Employees Association, New York's biggest public-worker union.

"Based on what we know, this is more evidence that the governor doesn't care about working people. He cares about his millionaire friends," said CSEA spokesman Steven Madarasz. "A 401(k)-style program will be a bonanza for Wall Street firms . . . And there is absolutely no real reason to pursue a Tier 6 now except for political grandstanding."

He said the average CSEA pension is $14,000 per year.

CSEA and the second-biggest public-worker union, the Public Employees Federation, are negotiating contracts with the Cuomo administration; the previous agreements expired April 1. Cuomo has called for union givebacks -- or up to 9,800 layoffs.

The federation also blasted the proposal as "unnecessary" because of the adoption of a lower-benefits category, Tier 5, in 2009. "There were significant changes under Tier 5 and we haven't had enough time to see the impact," spokeswoman Darcy Wells said.

Among the key changes under Tier 5, legislators doubled the amount of time workers needed to be vested to 10 years, the retirement age rose to 62 for most workers and employees must now contribute 3 percent to their pension immediately instead of contributing nothing for the first 10 years. Tier 5 also placed caps on how much a worker could put toward retirement.

Assembly Speaker Sheldon Silver (D-Manhattan) declined to comment, saying he hasn't seen Cuomo's details. A spokesman for Senate Majority Leader Dean Skelos (R-Rockville Centre) also withheld judgment.

"It's clear that exploding pension costs are bankrupting local governments and making it even more difficult on property taxpayers, and that something must be done," Skelos spokesman Scott Reif said. "We will review the governor's legislation when he formally introduces it."