DiNapoli: new pension tier offers 'minimal' savings

Thursday, March 01, 2012 - 10:30 AM

In case you missed it: Comptroller Thomas DiNapoli, in a sit-down interview with the Empire on Wednesday, laid on his case against the push for a new pension tier. It was buried in yesterday's piece but is worth taking an isolated look at:

The Comptroller also discussed the pension reform debate. Mayor Michael Bloomberg was in Albany on Wednesday to push state legislators to pass Governor Andrew Cuomo’s proposed Tier VI plan.

“As local elected leaders, we are the ones who see firsthand just how rising pension obligations are taking a bigger and bigger bite how they’re increasing our tax rates all across this state, money that’s coming out of the pockets of people who are working hard trying to make ends meet and have a future for themselves and their families.”

DiNapoli pointed out that the biggest driver of state pension costs right now is the fallout of the financial crisis which began in 2007.

“Any discussion of changing the parameters of a new tier is not going to impact on the cost that are of concern today,” he said. “We did a new Tier V just two years ago...It had minimal impact on the cost. You do a Tier VI, right--you do it today: minimal impact on the cost."

On this point, the Governor and Comptroller don’t appear to be in disagreement. Speaking to reporters on Tuesday, Cuomo said “the benefit” of a new pension tier wouldn’t be felt “for years.”

“All we're doing is now changing the rules going forward,” he said. “You're not going to feel these changes for many, many years.”

DiNapoli echoed the Governor’s point on the new tier: “Until you starting hiring a sign number of people in those two tiers, it's not going to have a significant impact."

The difference? Cuomo sees the system as ultimately flawed, as it leaves tax payers on the hook, and in need of a fundamental overhaul that would semi-privatize the system. DiNapoli sees the system as essentially working, and thinks that, instead of making these fundamental decisions “at an extreme” like we are now, we should approach such a long-term situation with an equally expansive mindset.

“I think it's totally appropriate to debate the different parameters of retirement age and contribution level--that's what Tier V's discussion was all about,” he said. “Let’s have a fact-based, thoughtful, inclusive discussion. I think that's the smarter way to approach this question."


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Comments [2]

VJ Machiavelli

All sides need to sit down and understand we need a 21st Century Plan, and Larry has a point  about introducing the employee contribution.

Remember that contribution earns 5% interest and at retirement you can rollover 75% tax free to your 401K plan, and it will reduce your benefit but it is an option that may be better for you in the long run.

Before there was the "Oracle of Delphi" there was Count Vampire J. Machiavelli

VJ Machiavelli
Power to the People who "VOTE"

Mar. 02 2012 04:43 AM
Larry Littlefield

“All we’re doing is now changing the rules going forward,” he said. “You’re not going to feel these changes for many, many years.”

Fine, then reduce the problem now by increasing contribution levels for current employees.  The state constitution says that pension benefits cannot be reduced or impaired, not that contribution levels can't be increased.  They are doing it in other states, states where the employees already contributed far more than in New York.

And so the retirees who got retroactive benefits don't get off the hook, how about having them kick in for their health insurance, with higher employee contribution levels the earlier they retire?  Stick that money in the pension funds too.

DiNapoli keeps talking about the state funds. The New York City funds are vastly more underfunded, even though city taxpayers have paid in far more.  He voted to increase pension benefits for people who lived in his district but worked for NYC over and over again.  Ask about that.

Mar. 01 2012 05:00 PM

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