New York City’s pension was on track to run out of money in ten years. Thus no one is surprised that Bloomberg has proposed for major reform.
The key changes include raising the retirement age from 57 to 65.
He also wants to up the minimum term of employment from 5 to 10 years.
Additionally he would proscribe practices like adding accumulated overtime to final year pay to boost pension benefits.
The first two changes are constitutionally protected and require support from the state. Normally this would be unlikely, but in 2011 there’s a pension crisis everywhere from Albany to Greece.
Here are the full details from the Mayor’s press office, via the NYT:
CIVILIANS AND TEACHERS
Retirement Age/Vesting
· New Tier: Newly hired civilians and teachers will vest after 10 years of city employment and will be eligible to receive pension checks at age 65.
· Current: Most employees can vest after five years. Retirement ages vary, but are generally age 57 for civilians and as low as 55 for teachers with 27 years’ experience.
Employee Contributions
· New Tier: Civilian employees and teachers will contribute 5 percent of their salary in all years of employment.
· Current: Civilians contribute 4.85 percent for the first 10 years, dropping to 1.85 percent for the next 20 years. Teachers contribute 4.85 percent for the first 27 years, dropping to 1.85 percent thereafter.
Final Salary Calculation
· New Tier: Overtime does not count toward final salary calculation.
· Current: Overtime does count toward final salary calculation.
Teachers Tax-Deferred Annuity
· New Tier: Elimination of fixed-return option for Teachers’ Tax-Deferred Annuity (will be fixed at 0 percent going forward, immediately, for all participating members).
· Current: 7 percent guaranteed rate of return.
UNIFORMED WORKERS
New uniformed employees of the Correction and Sanitation Departments, along with new members of the Police and Fire Departments, will be covered by the “Tier 3” plan currently applicable to new police and fire employees, with some modifications.
For years, new police and fire employees were allowed to go into the older “Tier 2,” a more expensive plan because of an annual extender bill that passed every year in Albany. In June 2009, Gov. David A. Paterson vetoed the bill, which caused new police and fire employees to fall into the less expensive Tier 3. The mayor applauded the governor’s action.
This proposal would cement the governor’s action by creating a “uniform” pension benefit for all of the uniformed services, and includes some changes to the existing Tier 3 for police and fire.
Police/Fire
Retirement Age/Vesting
· New Tier: Vest after 10 years and will be eligible to receive pension checks at age 65.
· Tier 3: Vest after five years, eligible to receive pension checks after 20 years of service with no minimum age.
· Tier 2: Vest after five years, eligible to receive pension checks after 20 years of service with no minimum age.
Full Pension
· New Tier: Full pension benefits after 25 years.
· Tier 3: Full pension benefits after 25 years.
· Tier 2: Full pension at 20 years.
Employee Contributions
· New Tier: 3 percent contribution for the first 25 years.
· Tier 3: Same.
· Tier 2: Varies between 0 percent and 3 percent, depending on employee age.
Variable Supplemental Fund
· New: Eliminates V.S.F. payments for current and future retirees.
· Current: After 20 years of service, $12,000 annual V.S.F. payment to nondisability retirees.
Final Average Salary Calculation
· New Tier: Average of final 3 years’ salary.
· Tier 3: Average of final 3 years’ salary.
· Tier 2: Final year of salary only.
Overtime
· New Tier: Overtime does not count toward final salary calculation.
· Tier 3: Overtime does count toward final salary calculation, with some limitations.
· Tier 2: Overtime does count toward final salary calculation.
Disability
· New Tier: No disability presumptions, 44 percent of final average salary.
· Tier 3: No disability presumptions, 44 percent of final average salary.
· Tier 2: disability presumptions in place, 75 percent of last year’s salary.
Sanitation (the new tier exactly matches police/fire new tier)
Retirement Age/Vesting
· New Tier: Vest after 10 years and will be eligible to receive pension checks at age 65.
· Current : Vest after five years, eligible to receive pension checks after 20 years of service with no minimum age.
Employee Contributions
· New Tier: 3 percent contribution for the first 25 years.
· Current: 8.35 percent for the first 10 years, then 5.35 percent for the next 10 years, then zero.
Full Pension
· New Tier: Full pension benefits after 25 years.
· Current: Full pension at 20 years.
Overtime
· New Tier: Overtime does not count toward final salary calculation.
· Current: Overtime does count toward final salary calculation, with some limitations.
Disability
· New Tier: No disability presumptions, 44 percent of final average salary.
· Current: Disability presumptions in place, 75 percent of salary.
Correction (the new tier exactly matches police/fire new tier)
Retirement Age/Vesting
· New Tier: Vest after 10 years and will be eligible to receive pension checks at age 65.
· Current : Vest after five years, eligible to receive pension checks after 20 years of service with no minimum age.
Employee Contributions
· New Tier: 3 percent contribution for the first 25 years.
· Current: 7.61 percent for the first 10 years, then 4.61 percent for the next 10 years, then zero.
Full Pension
· New Tier: Full pension benefits after 25 years.
· Current: Full pension at 20 years.
Overtime
· New Tier: Overtime does not count toward final salary calculation.
· Current: Overtime does count toward final salary calculation, with some limitations.
Disability
· New Tier: No disability presumptions, 44 percent of final average salary.
· Current: Disability presumptions in place, 75 percent of salary.
Variable Supplemental Fund
· New: Eliminates V.S.F. payments for current and future retirees.
· Current: Starting in 2019, current and future officers with 20 years of service would have received a guaranteed $12,000 annual V.S.F. payment.
Gus Lubin | Feb. 3, 2011, 7:52 AM
Source: The Business Insider