Bloomberg first referred to the fifth pension tier in 2003, which he said would not hurt municipal workers but would “help us get our pension costs under control,” according to the Times.
In accordance with Bloomberg’s pension restrictions, Labor Commissioner James Hanley proposed increasing the retirement age for future workers in District Council 37, which represents 120,000 workers, from the current age 57 to age 62, the Times reported. Hanley also proposed a regulation that new workers would have to pay 3% of their wages toward their retirement every year they worked, instead of the current 10-year time period.
For long-term municipal workers, Hanley proposed that they would receive an extra 2% in annual earnings in their pensions each year they worked more than 25 years, according to the Times, as well as a five-year pension plan formula that would save more money than the current three-year plan. Municipal salaries usually peak in the last few years.
The newspaper reported that though union leaders were open to “a less generous pension tier for new workers,” they want increased wages and improvements in pensions for current workers.
The Bloomberg administration also proposed raises of 3.15%, 2% and 2% over three years, but many District Council officials are holding out for 4% annual raises, the Times reported.
In January, Bloomberg announced his Fiscal Year 2007 Preliminary Budget, which includes a $3.5 billion investment in long-term health care costs, pay-go capital and debt reduction, according to a January news release from the New York City government’s Web site. Bloomberg proposed pension reform in the budget so that the city can increase municipal employee wage increases.
“In the short term, New York’s budget is stable and strong,” Bloomberg said in the news release. “However, structural imbalance and large out-year budget gaps persist and not only threaten the City’s long-term solvency, but could force painful budget cuts and tax increase in the future … For too long, New York City has not prepared for fiscal downturns and the ensuing budget problems they produce.”