Public Employee Press

Tier 6
Working longer and paying more for less
Tier 6 will reduce the pensions of new state and city workers by 21 percent over their lifetimes. The new pension plan wipes out many gains that resulted from years of struggle.

By GREGORY N. HEIRES

The nationwide campaign to erode public employee pensions scored a victory in New York as Democratic Gov. Andrew Cuomo strong-armed a too-compliant Legislature to approve a new plan that will make future state and city employees work longer and contribute more for a poorer benefit.

The plan will cut the pensions of new workers 21 percent over their lifetime while saving municipalities an estimated $80 billion, according to Cuomo - $21 billion for New York City - over 30 years. But almost none of the savings will be in the next 10 years, so the plan won't address immediate budgetary concerns.

While the new Tier 6 deeply cuts pension benefits, unions did manage to convince lawmakers to scale back Cuomo's original plan and reject the 401(k)-like option that would have financially undermined the whole pension system.

"Tier 6 is a tremendous betrayal," DC 37 Executive Director Lillian Roberts said. "It responds to the demands of bankers and Wall Street rather than the needs of the middle class and working poor."

A right-wing agenda

For more than three decades, business and right-wing think tanks have pushed to reduce government services, gut regulations, cut taxes for the wealthy and undermine the power of public employee unions. A key goal of the conservatives has been reducing pensions and promoting 401(k) plans to hand Wall Street billions of dollars.

The union's Political Action and Legislation Dept. worked with DC 37's national union, the American Federation of State, County and Municipal Employees, other AFSCME affiliates and the state AFL-CIO to try to derail the Tier 6 and its 401(k) option. The fightback included a media campaign, thousands of calls to lawmakers and the governor, and a 2,000-strong grassroots Lobby Day in Albany March 6 (see at left). Many activists also turned out March 10 for a "Tier It Down" rally at Zuccotti Park, birthplace of the Occupy Wall Street movement.

Working longer

The new plan increases the retirement age to 63 years. While that adds only a year for state employees, it is a severe blow to future employees in New York City, where most today can now retire at 57 and blue-collar workers in physically demanding jobs can retire at 50 after working 25 years.

Michael DeMarco, president of Traffic Employees Local 1455, said Tier 6 has destroyed the results of decades of struggle for age 50 retirement.

"Members in 'physically taxing' jobs will now have to work until they drop," said DC 37 Pension Committee Chair James Tucciarelli, the president of Sewage Treatment Workers and Sr. STWs Local 1320.

"This makes absolutely no sense since these workers are now paying for this benefit without any additional expense for the city," he said.

Acknowledging that she is ordinarily soft-spoken, New York City Housing Authority Local 957 President Walthene Primus said angrily that she felt betrayed by so-called labor-friendly legislators. "We should punish them in the next election," she said.

Under Tier 6, workers will have to contribute to their pensions until they retire. Currently they contribute for 10 years. The contribution will remain at 3 percent of salary for workers earning less than $45,000 and increase to 3.5 percent for those making $45,000 to $55,000, 4.5 percent for $55,000 to $75,000, 5.75 percent for $75,000 to $100,000, and 6 percent for $100,000 and above.

Pensions will be cut substantially by the Tier 6 formula for calculating the benefit, with the percentage of salary credited for each year of service reduced from 2 percent to 1.67 percent and the final average salary figure reduced by adding lower-paid years. Overtime in calculating non-uniformed workers' pensions, now capped at 10 percent of pay, will be capped at $15,000 plus inflation. Tier 6 eliminates lump-sum payments of the sick and leave time from being credited toward pensions.

For city workers, the time required to qualify for a pension, known as vesting, will double to 10 years. Part-time workers will be particularly hard-hit by this change because it means they will have to work nearly twice as long to qualify for a pension and health-care coverage.