NYS near deal to sweeten retirement benefits for public workers

ALBANY — State lawmakers are nearing a deal to sweeten retirement benefits for public workers hired after 2010, allowing teachers to retire at age 58 and other workers to contribute less toward the pension system, sources familiar with the negotiations told Newsday.

The changes, under discussion as part of the state budget, would be a win for the state’s major unions in an election year. They would affect virtually everyone working in state and local government, including teachers, firefighters, police and healthcare workers at public hospitals such as Stony Brook University Hospital and Nassau University Medical Center.

The deal comes with a roughly $500 million price tag, down from the more than $1 billion pension boost labor unions sought. Local governments and school districts would cover the bulk of the cost.

The changes would cover workers in what is known as Tier 6, which was created as lawmakers looked to tame fast-rising retirement costs. As a result, workers hired on or after April 1, 2012, receive fewer benefits, must wait longer to retire with full benefits and contribute more toward their pensions.

Contribution rates

The deal, if approved, would allow teachers to retire without penalty at age 58 with 30 years of service. It also would lower retirement contribution rates for public workers, excluding teachers, by three-quarters of a percent, with the lowest contribution rate being 3%. Contribution rates vary, with those earning more generally paying more.

The deal would increase the amount of overtime pay that counts toward pension benefits to 20%, up from 15% — largely helping uniformed workers like firefighters and police officers.

The changes, where applicable, also would apply to workers in the fifth pension tier, or Tier 5, who were hired from Jan. 1, 2010, through March 31, 2012, according to sources who were not authorized to speak on the record.

The proposals are still subject to change as union leaders continue to push to further sweeten the benefits, said sources familiar with the private negotiations.

Gov. Kathy Hochul, a Democrat, last week announced a "general agreement" on the state’s approximately $268 billion state budget, touting various policy wins, including slowing down the state’s climate goals and a $1 billion utility rebate. She acknowledged that details on spending are still being negotiated.

Senate Majority Leader Andrea Stewart-Cousins (D-Yonkers), asked Tuesday by reporters about the pension changes, didn’t provide details but said, "I think we will land some place that will benefit members."

Priority for unions

Union leaders have been pushing lawmakers to "fix" Tier 6 to attract and retain public sector workers.

There are about 787,241 members in Tier 6 and 38,873 in Tier 5, according to the most recent data. Changes would not generally affect members of the NYPD or FDNY pension funds because new members are generally considered Tier 3, and the city retirement systems don’t include Tier 5.

Several unions representing public workers on Tuesday declined to comment until the budget is final.

Cost was a major sticking point in discussions, according to the sources with knowledge of negotiations who were not authorized to speak on the record.

School district and municipal leaders have said that without financial help from the state, the increased cost would mean cuts to services or increased taxes.

"It’s hard to coherently explain how New York City, Buffalo and other municipalities and school districts are in various stages of financial distress and the governor thinks this is an appropriate time to purposely dial up their pension costs," said Ken Girardin, a fellow at the Manhattan Institute, a fiscally conservative think tank.

Girardin told Newsday he doesn’t think the changes will meaningfully affect recruitment and retention, and said the actual cost will be far higher than the $500 million price tag.