NY's Patterson Calls for Public Pension Rollbacks

December 17, 2008 (PLANSPONSOR.com) - New York Governor David A. Paterson has proposed a steep public employee pension rollback as part of the Empire State's emergency budget-cutting efforts.

According to a New York Times news report, Paterson is proposing to cut benefits for new state and local government workers-including New York City-by putting them in a new pension category. The Times said New York Mayor Michael Bloomberg helped Paterson prepare the portion of the plan covering his city.

The news report said under the governor’s proposal, workers in the state pension system would have to work until they were at least 62, instead of 55. The changes would apply to all state workers, many city employees, including teachers, and employees of a number of municipalities outside New York City.

New workers would also have to contribute 3% of their pay to the pension system for their entire career; currently the contributions stop after 10 years of service. Workers would also no longer be allowed to use overtime in their last year of service to bolster their future pension payments.

According to the Times , one of the most controversial elements would require New York City police officers and firefighters to work 25 years and reach age 50 before they qualified for a full pension. Now they can qualify for a full pension after 20 years regardless of age.

In the city, pensions for uniformed service members-who include police officers, firefighters, sanitation workers, and corrections officers-would vest after 10 years of service rather than the current five.

“We’ve made too many promises and asked for too few sacrifices,” Paterson said during an address to the state Legislature, according to the Times . “We’re going to have to change our culture as we know it.”

The Times said Paterson demurred when asked whether steeper layoffs could be expected if the unions balked at his demands.

“I don’t want to jump ahead of a negotiation or threaten the public employee unions,” Paterson said. “The public employee unions are saying probably the same things that most of us would say if we represented the workers, but inevitably they do have to come to a conclusion that there has to be some redress for this budget deficit.”

Other Paterson proposals call on current state workers to give back a previously negotiated 3% salary increase next year and defer a week’s pay until they retire. His budget would also require future retirees to significantly increase their contributions for health care coverage.

The governor’s office also said that to help finance pensions, the bill would require all new uniformed workers in New York City to contribute 5% of their salary until they have 25 years of service. For many uniformed workers, that 5% contribution would be a significant increase above what they pay now, the Times said.