As public employees, we are provided with a pension to support us in retirement years. As members of NYSUT, all of us in Tiers 1 through 5 have contributed toward our retirement. It is something on which we all rely.
Governor Cuomo is already campaigning for a Tier 6. The primary component of this plan centers on the establishment of a 401(k)-like option. If implemented, this plan could jeopardize the pension system as a whole.
According to NYSUT Executive Vice President Andy Pallotta, “Contrary to the rhetoric, New York State’s public pensions help strengthen the state’s economy, create jobs and cost less to run than 401(k)-type plans.” New York State Comptroller Thomas DiNapoli backs Mr. Pallotta’s statement and has warned that this proposal could negatively impact our workforce and the pensions of retired public employees. This proposal could lead to the erosion of the retirement system’s stability, as more new employees invest in the 401(k)-like option and less money goes into the retirement system.
At a National Public Pension Coalition meeting, Mr. DiNapoli stated, “The solution to dismantle the current defined benefit plans long term is not a solution; in fact [it] could create more challenges and costs down the road.”
New York has one of the strongest public pension systems in the country, according to the Pew Center on the States and Governing magazine. While the media has publicized increases, the facts are that employer contributions have been in the single digits since 1989, with six years of payments at less than 1.5 percent. Most contributions actually come from investment income. NYSUT United states that “90 cents of every pension dollar paid out through TRS came from investment income…Over the past 20 years, 83 cents of every dollar in benefits paid to New York retirees have come from investment returns, not employee or employer contributions.”
Tier 5’s implementation will reflect an overall savings of $35 billion over 30 years, since state and local workers will be contributing more to the retirement system.
Pensions are a vehicle to provide retirement security for public employees. All workers – those in public and private sectors – are entitled to security in retirement.
- From NYSUT United, February, 2012
