N.Y. Legislators Approve Pension Overhaul

March 15, 2012 (PLANSPONSOR.com) – The New York Legislature approved much of Governor Andrew Cuomo’s pension overhaul.

The pension overhaul affects only new workers, raising the retirement age for most employees to 63 from 62 and increasing the contribution rate for those who earn more than $45,000 to between 3.5% and 6% from 3%, Bloomberg News reports. Those with an annual salary of less than $45,000 contribute 3%. It also reduces the percentage of the final average salary used to calculate annual retirement payments.   

Cuomo didn’t get the retirement age of 65 and the 401(k)-type option he wanted for every worker, though workers who aren’t union members and earn at least $75,000 a year will be able to invest in the defined contribution plan, according to Bloomberg News. The governor previously said he was flexible about the 401(k) option.   

The governor is expected to sign the measures, according to legislative leaders and administration officials.   

When Cuomo announced his pension change plan in January in a budget proposal, he was met with opposition from public unions and Comptroller Thomas DiNapoli, who has said 401(k)s are “woefully inadequate.” (see “DiNapoli: Don’t Race to Dismantle DB Plans”). 

The Democrat-led Assembly rejected Cuomo’s pension proposals in a budget plan it approved earlier this week (see “New York Democrats Reject Governor’s Pension Changes”).