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Home » Clarion » 2012 » March 2012 » Unions Oppose Public-Sector Pension Cuts

Unions Oppose Public-Sector Pension Cuts

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“It’s time to rebuild the middle class, not attack what’s left of it,” says the New York State AFL-CIO in a statewide radio ad that began running on February 8. The ad is part of a hard-hitting campaign against proposed legislation that would reduce pension benefits for future public workers, including those hired at CUNY. Targeting “firefighters, teachers, nurses, school bus drivers, police officers – the people we all depend on – is the wrong way to go.”

PSC SAYS NIX TIER 6

The PSC strongly opposes the “call for a new, poorer pension tier,” said PSC President Barbara Bowen in a January 17 statement. “Such a change, if enacted, would do little to address current revenue shortfalls.”

Cutting benefits for new hires would also “sabotage CUNY’s efforts to attract top-quality talent, by reducing benefits for new faculty,” Bowen said. When then-Governor David Paterson won pension cuts two years ago with the creation of a new Tier 5, the PSC successfully resisted inclusion of CUNY employees.

Under New York’s constitution, pension benefits for current employees and retirees cannot be cut, so the proposal from Gov. Andrew Cuomo would affect only those hired in the future.

A February 2 report by State Comptroller Thomas DiNapoli warned that Cuomo’s pension plan would hurt faculty recruitment at New York’s public universities. DiNapoli also concluded that the Tier 6 plan would cost the State between $7 million and $16 million to put into effect, and could take a year or more to implement.

“New York State and City pensions are fiscally stable and well-funded,” said PSC Executive Director Deborah Bell. “And analysts expect State and City revenues to rebound long before these proposed changes would have a significant impact on spending.”

Cuomo’s proposed Tier 6 would make new employees pay more in order to receive less, and would require them to work longer to qualify for benefits. (See Clarion, August 2011.)

At CUNY today, those who enroll in the Teachers’ Retirement System (TRS) must have five years of total service credit to qualify for a pension. Under Cuomo’s proposed Tier 6 legislation, this requirement would increase from 5 to 12 years of total service credit. (Paterson’s Tier 5 increased this “vesting period” to 10 years, but CUNY was not affected.)

At present, CUNY employees who enroll in TRS are required to contribute 3% of their gross salary to TRS until they have 10 years of membership or credited service; after that time they are no longer required to contribute. Cuomo’s Tier 6 legislation would double this employee contribution to 6%, and require future members of TRS at CUNY to continue these contributions indefinitely.

Cuomo’s bill would cut pension benefits for future members of TRS and similar defined-benefit plans, reducing the pension multiplier from 2% to 1.67% for each year of credited service.

Peter Abbate, chair of the Assembly’s Committee on Government Employees, calculated that an employee earning $50,000 a year after 30 years of service would get a defined-benefit pension of just $2,000 a month under the governor’s proposal, according to the civil service weekly The Chief.

Cuomo’s proposal also takes aim at future enrollees in TIAA-CREF and other defined-contribution plans in CUNY’s Optional Retirement Program (ORP). For future ORP enrollees, it would slash employer contributions by half or more, from their current 8% to 10% rate down to 4%. Employee contributions, currently at 3%, would become optional for ORP participants, and be matched by the employer up to a 3% maximum.

POVERTY PLAN

That last provision would push many lower-paid members of CUNY’s instructional staff to choose such a plan in order to skip the employee contribution, observers say, even if that meant inadequate income in retirement. Legislators raised similar concerns about a provision in Cuomo’s plan requiring new public employees to choose between a 401(k) plan, with a smaller required contribution, and a traditional defined-benefit pension. Some warned that the 401(k) option could leave many lower-paid retirees on food stamps.

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[For information on what you can do, click here.] For more on the attack on the social safety net, see page 12.


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