State Comptroller Warns Against Cuomo's Proposed Pension System
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In the wake of a controversial pension proposal by Governor Andrew Cuomo, State Comptroller Thomas DiNapoli is warning against replacing public pension plans with 401k-type retirement funds. NY1’s Zack Fink filed the following report.State Comptroller Thomas DiNapoli defended the state's pension system at a forum in Washington Thursday, saying replacing it with a 401k-type plan would create economic uncertainty for state workers.
"401ks were never intended to replace pensions. They were designed as a saving mechanism to supplement Social Security and pension income, and I think they have certainly proven inadequate to provide retirement security,” said DiNapoli.
Governor Andrew Cuomo is proposing a Tier VI pension system for new hires. He says that would save New York City $30 billion over 30 years.
Specifically, the new tier would establish a 401k-type plan. Workers would then have a choice of enrolling in the 401k or remaining in a reduced benefit state pension system. That would include workers contributing more, raising the retirement age from 62 to 65, and requiring more years of service for employees to be vested in the system.
Most unions are strongly opposed to the changes.
"I think generally we did a tier-five two years ago. You know the way it was built, the governor at that time had a discussion with the unions and everyone was more comfortable after that discussion," said Assembly Speaker Sheldon Silver.
The governor says the current system is unsustainable, but DiNapoli claims New York is in better shape than most states since it hasn't skipped payments. The average state pension is roughly $19,000.
Senator Neil Breslin represents Albany, home to many public employees.
"It's a different time when there isn't enough money for all of us, and that discussion will probably lead to some changes. I would not be surprised if there was some form of a Tier VI passed this year," said Breslin.
An effort to establish Tier VI stalled in the legislature last June. Observers say what is different this time around is that Cuomo has made it part of the budget, which means lawmakers risk shutting down the government if they fail to vote for it.