Why I’ve voted no on pension reform
New York’s pension board is in a tough spot because of a looming pension shortfall, the governor’s chief executive says.
Andrew Cuomo announced Wednesday that the board would begin a plan to reform its pension system to meet the state’s obligations, including an annual pension plan with a 10-year payout.
The governor’s proposal comes as the pension fund, the state Employees’ Retirement System, faces an expected shortfall of $1.5 billion.
The pension board has a mandate to provide its members with adequate retirement income and, according to Cuomo, it “is in a position to provide that income to its members.”
In an interview with New York magazine, Cuomo said the pension board would need to consider “whether it is a good use of taxpayer dollars to be in this position.”
It’s a tough time for the pension system, which is underfunded by more than $1 billion and is in need of a boost.
In a speech last month, Cuomo pledged to address the pension shortfall by “pursuing reforms that would allow it to be self-sufficient.”
He said that would mean a reform of how the state pays pensions, including setting a fixed payout.
Cuomo also announced plans to reduce the state pension age to 65, a change that would reduce the number of retirees at the top of the pension structure.
It would also reduce the amount of money that goes into the pension plan, reducing the money available for future retirements.
“The plan to implement this change in 2018 will help make the pension more sustainable, and that will be the goal of the next administration,” Cuomo said in the speech.
In February, Cuomo approved a pension overhaul that would have given the state workers a raise, a new retirement age and more generous retirement benefits.
He also approved a law that required the state to create a system of tax-free retirement accounts.
But Cuomo’s plan also calls for a reduction in the number and quality of retirements for state workers, and for the state retirement system to set aside more money for future retirees.
The board would have to approve any change to its plan.
New York State Teachers Union president John R. Reilly said the governor was making a “reckless mistake” in proposing pension reform.
“It’s a mistake because it’s not going to help the pensioners, and it’s a bad plan because it will increase the pensioner cost,” Reilly said.
“We’re going to fight this with everything we’ve got.”
A state board of pension trustees meeting will take place this week.
“This is a difficult time for New York,” said the union’s president, Tom Pascual, who said he supports a reform that would keep workers with pensions at a good value.
“But the best thing we can do is let the pension funds continue to operate as they are, and not take a hard look at them.”
A bill to raise the state income tax rate to 8 percent is also in the works.
The bill is supported by many Democrats, including Sen. Diane Savino, a Queens Democrat.
“Our plan is to take on this issue with all of our political and legislative resources, and I think it’s the right thing to do,” Savino said Wednesday in a statement.