Cuomo’s Pension Proposal Riles Unions

By: - January 18, 2012 12:00 am

In June, when New York Governor Andrew Cuomo proposed making public employee pensions less generous, lawmakers didn’t act. Undaunted, Cuomo yesterday announced a new pension proposal that would represent an even bigger change from the status quo, much to the disappointment of the state’s public worker unions.

One of the key differences this year is that Cuomo, a Democrat, wants to create an optional 401k-style defined-contribution plan. Employees would still have the choice of sticking with the traditional defined-benefit plan, but the defined-contribution plan would come with some features not available in the defined-benefit system. For employees still picking the defined-benefit plan, Cuomo’s proposal would cut benefits, increase employee contributions and raise the retirement age from 62 to 65, the Albany Times-Union reported .

Cuomo’s plan, which was part of the budget proposal he introduced yesterday, applies to workers in both state and local governments, but it applies only to new employees. The governor’s office touted the changes as a way of providing help to fiscally stressed localities, declaring that the plan will “save state taxpayers and local governments outside New York City billion, and will save New York City billion over the next 30 years.”

The state’s two legislative leaders, Democratic Assembly Speaker Sheldon Silver and Republican Senate President Dean Skelos, said that Cuomo’s plan could pass this year, according to Bloomberg News . The ideas also won praise from some conservatives, such as E.J. McMahon of the Empire Center for New York State Policy.

Groups representing public workers, however, argued that they had already sacrificed enough. They pointed out that in 2010 they had agreed to a fifth pension tier that came with a promise of billion in savings over 30 years. “The Tier 6 proposal is nothing more than a false choice of accepting severely reduced pension benefits or joining an inefficient 401k style pension system,” said Ken Brynien, president of the New York State Public Employees Federation, in a statement .

Danny Donohue, president of the Civil Service Employees Association, was no less critical. “CSEA has no hesitation in saying that the proposal for a new public employee pension tier is an assault on the middle class,” he said in a statement , “and a cheap shot at public employees.”

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Josh Goodman

Josh Goodman helps lead research on fiscal management and place-based economic development programs as part of Pew’s state fiscal health project. Goodman has served as a primary author for Pew studies that examine how states should evaluate tax incentives and maintain budget discipline when implementing those incentives.