Tier 6 pensions are the retirement plans for New York State and local government employees hired on or after April 1, 2012, which were established to provide sustainable benefits while controlling public costs. This page covers CBC’s work on Tier 6 benefit structures, the fiscal impact of legislative "sweetener" bills, pension liability growth, retirement plan rollbacks, and the long-term budgetary effects on state and local governments.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
State leaders should retain current Tier 6 pension provisions that provide competitive retirement benefits at a cost affordable to the State and local governments.
State lawmakers should cut the sweetener habit and stick to a healthy Tier 6 diet as enacted over a decade ago.
Lawmakers should maintain the valuable Tier 6 reforms, which continue to offer generous defined benefits for public employees.
Governors should veto benefit sweeteners that are enacted outside of the budget and collective bargaining processes.
Key Data
As of May 2026, increasing Tier 6 pension benefits at a cost of $547 million will pressure local governments and school districts to cut services or raise taxes.
As of October 2024, enacted Tier 6 rollbacks, including changing the vesting period from 10 to 5 years and the final average salary calculation from 5 to 3 years, increased annual State and local costs by $438 million in the first year.
As of October 2024, the net present value of pension benefits—the full cost of the changes for current members in today's dollars—increased by more than $4.3 billion due to enacted Tier 6 rollbacks.
The enacted New York State budget includes an increase to Tier 6 pension benefits costing $547 million, which threatens to force local governments and school districts to raise taxes or reduce services. Additionally, the budget utilizes a pension gimmick that defers the costs of closing near-term city budget gaps onto taxpayers in fiscal years 2033 through 2037.
Key Data
$547 million
— The cost of increasing Tier 6 pension benefits, which will pressure local governments and school districts to cut services or raise taxes to fund benefits that are already excellent.
Proposed enhancements to Tier 6 pension benefits threaten to cost the state, local governments, and school districts billions of dollars annually, potentially driving property tax increases or service cuts. These changes are unnecessary for recruitment, as the current system remains competitive and provides a rare defined benefit pension.
Recommendations related to Tier 6 Pensions
New York State should not enhance Tier 6 pension benefits.
Policymakers should address lower pay and challenging work conditions in hard-to-fill jobs rather than enhancing pension benefits.
Key Data
$438 million
— Annual cost of Tier 6 enhancements enacted in 2022 and 2024 to State and local governments.
$700 million
— 2022 estimate for the annual cost of just one proposed change to reduce progressive employee contributions.
2 percentage points
— Growth threshold in pension contribution rates that triggers an exemption to the State’s property tax levy cap.
New York State faces a structural budget gap and must make difficult choices to ensure long-term fiscal stability while maintaining essential services. As part of these efforts, the state should retain current Tier 6 pension provisions to ensure retirement benefits remain competitive and affordable for state and local governments.
Recommendations related to Tier 6 Pensions
State leaders should retain current Tier 6 pension provisions that provide competitive retirement benefits at a cost affordable to the State and local governments.
New York State is urged to veto 17 legislative bills that would increase public costs by expanding pension, disability, and death benefits without providing offsetting savings or enhanced services. These proposed benefit enhancements, which include changes to Tier 6 pension plans, would impose significant immediate and long-term financial burdens on state and local governments.
Recommendations related to Tier 6 Pensions
The Governor should veto the 17 bills that increase costs to New York State and local governments without enhancing public services or providing offsetting savings.
The Governor should reject the bill that would extend the “death gamble” benefit to Tier 4 and Tier 6 Special Plan transit members of NYCERS.
The Governor should veto the various bills that expand eligibility and pension benefits, as granting targeted benefit enhancements increases costs and may encourage further expansions.
Key Data
$30.0 million
— Estimated immediate costs of 12 bills with complete fiscal notes.
$18.1 million
— Estimated annual costs thereafter for 12 bills with complete fiscal notes.
$4.2 million
— Annual cost of extending the “death gamble” benefit to Tier 4 and Tier 6 Special Plan transit members of NYCERS.
$5.9 million
— Annual cost of reducing the service requirement for Tier 3 members of the Uniformed Sanitation Force and Uniformed Correction Service.
$3.9 million
— Annual cost of reducing the service requirement for Tier 3 members of the New York City Fire Pension Fund.
$1.6 million
— Annual cost of allowing NYCERS or BERS members enrolled in the Automotive 25/50 retirement plan to switch to Tier 4 enrollment.
New York State has been rolling back the fiscally prudent Tier 6 pension reforms enacted in 2012, leading to increased costs for state and local governments. Lawmakers should stop enacting these costly benefit enhancements and maintain the existing Tier 6 pension structure to ensure long-term fiscal stability.
Recommendations related to Tier 6 Pensions
State lawmakers should cut the sweetener habit and stick to a healthy Tier 6 diet as enacted over a decade ago.
Lawmakers should maintain the valuable Tier 6 reforms, which continue to offer generous defined benefits for public employees.
Governors should veto benefit sweeteners that are enacted outside of the budget and collective bargaining processes.
Key Data
$438 million
— Total annual cost of enacted Tier 6 rollbacks to State and local governments.
$1.5 billion
— Annual price tag of just one proposed Tier 6 rollback.
$61 million
— Annual pension contribution cost increase to State and local governments from changing the minimum vesting period from 10 years to 5 years.
$377 million
— Annual cost increase to State and local governments from changing the final average salary calculation from five years to three years.
$6.6 billion
— Increase in the net present value of benefits from a proposal to reduce employee contribution rates to 3% for Tier 6 employees.
$4.3 billion
— Increase in the net present value of pension benefits from enacted Tier 6 changes.
The New York State fiscal year 2025 budget agreement includes Tier 6 retirement-plan sweeteners that increase state pension liabilities by approximately $4 billion. These changes impose an unfunded mandate on local governments and school districts, resulting in $377 million of unnecessary costs in the upcoming year alone.
Key Data
$4 billion
— The addition of Tier 6 retirement-plan sweeteners adds roughly $4 billion to the State’s pension liabilities.
$377 million
— The addition of Tier 6 retirement-plan sweeteners adds $377 million of unnecessary costs on state and local government budgets next year alone.
The proposed Tier 6 retirement-plan enhancement is criticized as an unnecessary and unfunded mandate on localities that lacks long-term financial sustainability. This policy change is viewed as a fiscal burden that exacerbates the state's structural budget challenges.
Recommendations related to Tier 6 Pensions
The State should reconsider the Tier 6 retirement-plan enhancement, as it is unnecessary, unpaid for in the long run, and constitutes an unfunded mandate on localities.
The proposed change to Tier 6 pension benefits would impose a massive, unfunded mandate on New York City and other localities, costing the State and local governments nearly $400 million annually. This increase would force public employee pension contributions to rise by $320 million in the coming year alone, despite the existing plan already being more generous than most private-sector alternatives.
Recommendations related to Tier 6 Pensions
The proposed change to Tier 6 pension benefits, which will cost the State and local governments in New York nearly $400 million per year, is unnecessary, expensive, and should be rejected.
Key Data
nearly $400 million
— annual cost to the State and local governments in New York for the proposed change to Tier 6 pension benefits
$320 million
— increase in pension contributions for public employees next year alone due to the proposed change
The state legislature passed 20 bills that would increase public employee benefit costs by at least $78.6 million immediately and $21.0 million annually, prompting calls for a veto. These measures, which include pension enhancements for Tier 6 members and various disability and death benefit expansions, lack sufficient fiscal oversight and offsetting savings.
Recommendations related to Tier 6 Pensions
The Governor should veto the bill that would extend to Tier 6 members of the Police and Fire Retirement system a one-year final average salary calculation, as it increases costs.
The Governor should veto the bill that would modify the calculation of in-service death benefits for fire marshal employees in Tiers 3 through 6, as it adds to public costs.
The Governor should veto the 20 bills that enhance pension and other benefits without providing offsetting savings, which includes legislation impacting Tier 6 members.
Key Data
$15.2 million
— Immediate past service cost for the Tier 6 pension bill S8401/A9581.
$3.1 million
— Annual cost for the Tier 6 pension bill S8401/A9581.
$58,700
— Immediate past service cost for the fire marshal Tier 3 through 6 death benefit bill S8584/A9738.
$5,900
— Annual cost for the fire marshal Tier 3 through 6 death benefit bill S8584/A9738.
$78.6 million
— Immediate cost of 15 bills with fiscal notes attached.
$21.0 million
— Annual cost of 15 bills with fiscal notes attached.
The state legislature passed 21 bills that would increase costs for New York State and local governments by enhancing pension, disability, and other benefits without providing offsetting savings or improved services. These measures, which include specific expansions for public employees in Tiers 3 through 6, should be vetoed to prevent further fiscal strain outside of established budget and collective bargaining processes.
Recommendations related to Tier 6 Pensions
The Governor should veto the 21 bills that would enhance pension or disability benefits without providing enhanced services to New Yorkers or offsetting savings.
The Governor should reject these legislative measures because they increase costs to New York State and local governments outside of budget negotiations and collective bargaining processes.
The Governor should veto the bills to prevent the encouragement of further benefit expansions, as the number of such "sweetener" bills passed by the Legislature appears to be increasing.
Key Data
$64.1 million
— Immediate cost of the 15 bills with fiscal notes.
$7.8 million
— Annual cost of the 15 bills with fiscal notes.
The state legislature passed 18 bills that would expand pension and disability benefits, which threatens the fiscal stability achieved by earlier reforms like Tier 6. These measures would increase costs by at least $71 million and undermine the hard-fought compromises that have helped contain personnel expenses.
Recommendations related to Tier 6 Pensions
The Governor should veto all 18 bills passed by the Legislature that enhance pension or disability benefits without providing offsetting savings.
The Governor should veto all the bills to send a strong message that past reforms, such as Tier 6 pension benefits, will not be overturned.
The Governor should veto A7620-A/S5903-A, which would cost $5.6 million annually to allow New York City police officers to receive retirement credit for time spent as cadets.
Key Data
$71 million
— Projected first-year cost of the 18 bills passed by the Legislature.
$41 million
— First-year cost of A4431/S5207, which would establish a 20-year retirement plan for certain state law enforcement positions.
$15.7 million
— First-year cost of A7874-A/S5905-A, which would require New York City paraprofessionals to join the Teachers Retirement System.
$5.6 million
— Annual cost of A7620-A/S5903-A to allow New York City police officers to receive retirement credit for time spent as cadets.
$2.1 million
— First-year cost of A5324/S5133, which would grant ambulance medical technician supervisors and staff an enhanced disability benefit.
$1.4 million
— First-year cost of A6214/S3922, which would enhance accidental and performance of duty disability pensions for certain law enforcement and university police officers.
The 2019 Benefit Sweetener Scorecard catalogs 189 legislative bills that would expand public employee benefits, including numerous proposals to enhance pension tiers, disability coverage, and health insurance. These legislative proposals often carry significant long-term fiscal costs for the state and local governments, despite many being presented with minimal or no fiscal notes.
Key Data
$149 million
— Immediate past service cost for increasing Tier 6 pension benefits from 35% to 40% for service in excess of 20 years.
$942.6 million
— Total cost increase for raising the base of computation for retirement allowances for New York State Teachers, police, fire, and New York City retirement systems.
$59.3 million
— Immediate past service cost for calculating final average salary for elected or appointed judges as the last year's salary.
$41.1 million
— Immediate past service cost for establishing a 20-year retirement plan for law enforcement officers in the Department of Environmental Conservation and regional state park police.
$24.9 million
— Additional annual cost in 2020 for calculating New York City police officer pensions as if they were detectives or sergeants.
$11.9 million
— Annual employer contribution increase for providing New York City corrections officers a lump sum payment equal to variable supplement payments.
The 2019 Benefit Sweetener Scorecard tracks 189 legislative bills that would increase public employee benefits, including pensions, disability, and health insurance. These proposed changes carry significant fiscal implications, with some individual bills projected to cost hundreds of millions of dollars.
Key Data
$942.6 million
— The estimated cost of increasing the base of computation for the base retirement allowance for New York State Teachers, State and local police and fire, and New York City retirement systems.
$149 million
— The estimated annual cost and immediate past service cost of increasing Tier 6 pension benefits from 35% plus 2% for each year of service in excess of 20 years to 40% plus 2% for each year of service in excess of 20 years.
$41.1 million
— The estimated cost of establishing a 20-year retirement plan for members or officers of law enforcement, including DEC, regional state park police, and university police officers.
$13.1 million
— The one-time past service cost of modifying the in-service death benefit for Tiers 2 through 6 State correction officers.
$24.9 million
— The estimated additional annual cost in 2020 for providing that New York City police officers serving for 25 years have their pension calculated as if they were a detective for two years at the highest rate of pay.
$121.7 million
— The additional annual cost of increasing the salary used in the computation of the special accidental death benefit by 3% in cases where the date of death was before 2019.
The document lists various legislative bills vetoed by the Governor in 2018 that would have expanded pension and disability benefits for public employees, including specific changes to Tier 6 retirement plans. These vetoed measures carried significant fiscal implications, with several bills imposing millions of dollars in one-time past service costs and ongoing annual expenses on the state and local governments.
Recommendations related to Tier 6 Pensions
The Governor should continue to veto legislation that expands costly employee and retiree benefits, as these measures impose significant fiscal burdens on the state and local governments.
Policymakers should reject bills that weaken Tier 6 pension protections, such as removing limits on overtime pay for final average salary calculations.
The state should maintain existing retirement age and benefit reduction standards for Tier 6 members to avoid unnecessary retroactive and annual costs.
Key Data
$13.2 Million
— One-time past service cost for enhancing the in-service death benefit for state correction officers.
$4.70 Million
— Past service and first-year costs associated with removing the overtime pay limit for Tier 6 New York City Transit Authority employees.
$1.50 Million
— Past service and first-year costs for allowing Tier 6 uniformed court officers to retire without early age reduction.
$2.42 Million
— Past service and first-year costs for providing three-quarters accidental disability retirement to certain law enforcement members.
$850,000
— Annual cost increase for removing the overtime pay limit for Tier 6 New York City Transit Authority employees.
$363,000
— Annual cost for allowing Tier 6 uniformed court officers to retire without early age reduction.
Several legislative proposals aimed at enhancing pension benefits for various public employees, including Tier 6 members, were vetoed in 2018. These bills would have increased costs for the state and local governments, with specific measures like removing overtime limits for Tier 6 transit employees and lowering retirement ages for court officers carrying significant fiscal impacts.
Key Data
$4.70 Million
— Past service and first-year costs for removing the overtime pay limit for Tier 6 New York City Transit Authority employees.
$1.50 Million
— Annual costs and one-time retroactive cost for allowing Tier 6 uniformed court or peace officers to retire without early age reduction.
$13.20 Million
— One-time past service cost for enhancing the in-service death benefit for retirement-eligible state correction officers in Tiers 2 through 6.
The Governor should veto various legislative bills that expand government employee and retiree benefits, as these measures would undermine the fiscal savings achieved through the implementation of Tier 6. These proposed benefit enhancements, which include retirement incentives and increased disability coverage, threaten to erode the financial restraint established by the state.
Recommendations related to Tier 6 Pensions
The Governor should veto A711B/S1411B, an expensive enhancement to volunteer firefighter benefits that was delivered to his desk.
The Governor should veto the 15 other bills passed by the legislature that provide expensive enhancements to government employee and retiree benefits.
The Governor should veto these bills to preserve the fiscal restraint that has been sought over the last six and a half years.
The Governor should reject these bills because adopting them would erode the savings that New York State and its localities experience from the implementation of Tier 6.
Key Data
$13.7 million
— Past service costs for A5133a/S4077, which would enhance death benefits for State correction officers who are retirement eligible but die before retiring.
$8.9 million
— Immediate past-service cost for A7185A/S5484A, which would provide a special accidental death benefit for uniformed New York City sanitation employees.
$6.8 million
— Annual cost for New York City associated with A7185A/S5484A, which provides a special accidental death benefit for uniformed sanitation employees.
$1.15 million
— Past-service costs for A7134/S5130, which would increase disability payments for Nassau County sheriffs, deputy sheriffs, under sheriffs, and correction officers.
$394,000
— Past service costs for A3332/S3670, which would allow Tier 6 uniformed court officers and peace officers to retire early.
$300,000
— Annual increase in authority expenses for A7642/S6594, which would authorize a retirement incentive for certain law enforcement and maintenance employees at the Triborough Bridge and Tunnel Authority.
The state legislature has passed ten bills that would expand government employee and retiree benefits, potentially eroding the fiscal savings achieved through the implementation of Tier 6. These proposed enhancements, which include changes to early retirement plans and disability benefits, should be vetoed to maintain fiscal restraint.
Recommendations related to Tier 6 Pensions
The Governor should veto the 10 bills passed by the legislature that are expensive enhancements to government employee and retiree benefits.
The Governor should reject legislation that would erode the savings that New York State and its localities are experiencing from the implementation of Tier 6.
The Governor should veto A9702/S7023, which would eliminate required employee contributions in the New York State Retirement System and the Local Police and Fire Retirement System.
The Governor should veto A6612b/S4001b, which would allow counties to offer correction officers and deputy sheriffs a pension equal to 50 percent of salary after 20 years of service regardless of their age.
The Governor should veto A10369a/S7174b, which would allow certain members of the New York State Retirement System and the Local Police and Fire Retirement System to opt out of Tier 3 and into Tier 5.
Key Data
6.6 percent
— The portion of salaries shifted from employees to state and local taxpayers under A9702/S7023.
7 percent
— The potential cost to counties for pension enrichment under A6612b/S4001b.
$100,000
— The cost to the State in the first year for A9440/S6936.
$600
— The increased weekly payment for total disability benefits for volunteer firefighters and ambulance drivers under A5133c/S1000d.
$244,000
— The cost for the individual known to be impacted by A7146a/S5012a, though additional costs are likely.
$25,000
— The annual cost to the State for A10614/S8071.
Proposed legislation to enhance disability benefits for Tier 3 and Tier 6 uniformed employees, including police, fire, sanitation, and correction officers, would result in substantial fiscal costs for the city. These legislative changes are projected to require hundreds of millions of dollars in additional actuarial present value contributions by fiscal year 2019.
Key Data
$35.7 Million
— FY2015 budget increase for the proposal to improve disability benefits for Tier 3/6 police uniformed employees.
$272.3 Million
— Actuarial present value of NYC contributions in FY2015 for the proposal to improve disability benefits for Tier 3/6 police uniformed employees.
$622.9 Million
— Actuarial present value of NYC contributions in FY2019 for the proposal to improve disability benefits for Tier 3/6 police uniformed employees.
$37.8 Million
— FY2015 budget increase for the proposal to grant disability benefits to Tier 3/6 police and fire uniformed employees and add new presumptions of injury.
$850.2 Million
— Actuarial present value of NYC contributions in FY2019 for the proposal to grant disability benefits to Tier 3/6 police and fire uniformed employees and add new presumptions of injury.
New York State legislators introduced over 50 bills to enhance public employee pensions during the 2015 session, threatening the fiscal savings established by the 2012 Tier VI reforms. The Governor is urged to veto four specific bills that would increase retirement benefit costs and potentially lead to a costly rollback of taxpayer savings.
Recommendations related to Tier 6 Pensions
The Governor should veto A7490/S3010, A6771A/S4907, A5327C/S3948B, and A7547/S5785 to prevent increases in the cost of public employee retirement benefits.
State and local government employers should protect the savings achieved from the 2012 Tier VI pension reforms by rejecting legislative 'sweeteners' that would undo these achievements.
Key Data
50
— Number of bills introduced by State legislators during the 2015 session to enhance State and local government employee pensions and benefits.
4
— Number of bills the Governor is urged to veto that would increase the cost of public employee retirement benefits.
New York State legislators introduced over 50 bills to enhance public employee benefits, which would increase taxpayer costs by at least $140 million and undermine the landmark pension reforms enacted in 2012. These legislative proposals, which include expanded disability and death benefits as well as enhanced retirement plans, threaten to reverse recent cost stabilization and reduce administrative flexibility for managing retiree health insurance.
Recommendations related to Tier 6 Pensions
Legislators should reject the bills detailed in the scorecard because they would add to already costly pension expenses and erode the landmark reforms enacted in 2012.
It is important that these legislative proposals do not advance to the Governor’s desk.
Key Data
$140 million
— Minimum increase in annual costs to New York taxpayers from the collective bills.
$40 million
— First-year cost of proposal A.8032/S.5656, which improves disability benefits for recently hired employees.
$40 million
— Upfront cost of bills A.7801 and S.5245, which improve death benefits for retirement-eligible State correction officers.
$14 million
— Cost to allow Tier 3 and 4 retirees who retired prior to 1999 to be reinstated in earlier tiers.
$8.4 million
— Cost of S.3919, which provides for a cost-of-living adjustment beginning five years after retirement at age 55.
$1.8 million
— Cost of A. 6771A/S. 4907, which would enhance retirement plans of uniformed court or peace officers.
The 2015 Disability Benefit Scorecard tracks various legislative proposals aimed at increasing disability benefits for Tier 3 and Tier 6 uniformed employees, which would significantly raise city pension costs. These bills seek to restore earlier benefit structures, such as higher final average salary calculations and the elimination of Social Security offsets, with projected actuarial costs reaching hundreds of millions of dollars.
Key Data
$39.1 Million
— FY2015 budget increase for bill S5656, which provides improved disability benefits for sanitation and correction uniformed employees.
$889.3 Million
— Actuarial present value of NYC contributions through FY2019 for bill S5656.
$37.8 Million
— FY2015 budget increase for bill A6046/S4269, which grants disability benefits to Tier 3/6 police and fire uniformed employees.
$850.2 Million
— Actuarial present value of NYC contributions through FY2019 for bill A6046/S4269.
NY1 When it comes to police and firefighters, Governor Andrew Cuomo wants to roll back part of the pension reform he helped push through the state legislature in 2012.
Proposed legislation A9594/S7326 threatens to reverse critical pension reforms by enriching police disability benefits, potentially increasing city costs by hundreds of millions of dollars annually. Maintaining these reforms is essential for fiscal stability, as previous changes are projected to save the city $31 billion over three decades.
Recommendations related to Tier 6 Pensions
The Mayor should oppose the supporting home rule message under consideration in the City Council regarding bill A9594/S7326.
The Mayor should oppose the bill itself, which would reverse recent pension reforms and increase future pension fund contributions.
The Mayor should affirm his commitment to fiscal responsibility by opposing the legislation that would erode recent pension reforms.
Key Data
$8.2 billion
— Pension costs in fiscal year 2013.
235 percent
— Increase in pension costs from fiscal year 2004 to fiscal year 2013.
$31 billion
— Estimated savings for the City over 30 years from the 2012 pension reforms.
$35 million
— Increase in the City's costs in fiscal year 2015 if the proposed changes are enacted.
$266.4 million
— Actuarial value of contributions required by the City to fund the new benefit in fiscal year 2015.
$617.9 million
— Actuarial value of contributions required by the City to fund the new benefit in fiscal year 2019.
The 2014 legislative session featured numerous proposals to enhance public employee pension benefits, which would collectively impose over $1.8 billion in costs on state and local taxpayers. These legislative 'sweeteners' include various measures to lower retirement ages, increase disability payouts, and expand service credit eligibility across multiple pension tiers.
Key Data
$87 Million
— One-time cost of the bill allowing **Tier II, III, IV, V, and VI members of NYSLERS** to retire without a benefit reduction upon completion of 35 years of service.
$1,699 Million
— Total estimated state-level costs for the **2014 pension benefit sweetener bills** listed in the scorecard.
$116 Million
— Total estimated local-level costs for the **2014 pension benefit sweetener bills** listed in the scorecard.
The New York State Assembly introduced eight bills in February 2013 that would increase pension benefits for public employees and retirees, adding at least $1.35 Billion in costs to state and local employers. These legislative proposals threaten to erode the savings achieved by the recently enacted pension tier for new employees, which was designed to control rising pension costs.
Key Data
$1.35 Billion
— Total cost of eight bills introduced in the New York State Assembly to enhance pension benefits for public employees and retirees.
$1.1 Billion
— One-time cost to the State imposed by bill A4890, which increases the benefit multiplier for service rendered after 30 years.
0.2%
— Additional annual contribution required to cover members of Tiers 2, 3, and 4 pension plans under bill A4890.
The 2012 Tier VI pension legislation introduced significant cost-saving measures for New York, including increased employee contributions and changes to benefit calculations that align with national norms. While the reform provides long-term taxpayer relief by curbing pension padding and limiting benefit multipliers, it includes less desirable provisions such as a modest increase in retirement age and the continued inclusion of unlimited overtime for uniformed employees.
Key Data
3% to 6%
— Range of employee contributions for Tier VI members.
The Tier VI pension proposal does not force police officers and firefighters to work until age 65, as they remain eligible to retire with full benefits after 20 or 22 years of service. While the proposal increases the age for claiming partial pension benefits for those leaving service early from 62 to 65, New York's retirement plans remain more generous than those in many other states that implemented changes following the recession.
Key Data
22 years
— Current service requirement for newly hired New York City Police Officers and Firefighters to be eligible to retire.
20 years
— Service requirement for future State and local members of the New York State Police and Fire Retirement System to retire with no minimum age.
62 to 65
— The increase in age at which members who leave for reasons other than retirement or death can claim a partial pension benefit.
12
— Number of states that made changes to retirement benefits for uniformed personnel between 2010 and 2011.
25 and out
— Retirement plan structure adopted by new uniformed hires in states including Arizona, Connecticut, Hawaii, Maryland, New Jersey, Rhode Island, and Louisiana.
55
— Age requirement for new uniformed employees in Illinois to claim a pension.
Governor Cuomo’s proposed Tier VI pension reform aims to align New York’s employee contribution rates with national standards by increasing them to between 4 and 6 percent of wages. The plan also introduces a risk-reward mechanism to share market volatility between taxpayers and employees, addressing the current disparity where New York taxpayers bear a significantly higher burden than the national average.
Recommendations related to Tier 6 Pensions
The state should raise pension contributions by new employees to between 4 percent and 6 percent of wages, depending on pay level.
The state should implement a “risk-reward” approach to pension contributions, which would share the downside risk and the upside potential with employees.
If the employer-contribution rate as a share of payroll rises above 7 percent, then half of the added amount should be contributed by employees.
If employer contributions fall below 4 percent of payroll, then half of the saved amount should be used to lower employee contributions.
Key Data
22 percent
— In 2009, only 22 percent of state and local pension plans required employee contributions of less than 3.9 percent of wages.
55 percent
— In 2009, employee contributions of 6 percent or more were required in 55 percent of US public plans.
66 percent
— In 2010, employers in US state-run public-pension funds paid on average 66 percent of the total, while employees paid 33 percent.
89 percent
— New York state and participating local governments paid 89 percent of pension costs, while employees paid 11 percent.
87 percent
— In 2009, 87 percent of the amount paid to New York’s local plans came from taxpayers, and just 13 percent came from employees.
7:1
— The ratio of taxpayer to employee contributions for New York's local plans is 7:1, compared to a national average of 4:1.
Governor Cuomo's Tier VI pension reform proposal aims to align New York's public sector employee contribution rates with national norms by increasing them to a range of 4 to 6 percent. This plan also introduces a risk-sharing mechanism that distributes market performance volatility between taxpayers and employees, reducing the burden currently borne almost entirely by employers.
Recommendations related to Tier 6 Pensions
The state should adopt the Governor's Tier VI proposal to increase employee contribution rates to a range of 4 to 6 percent, which would align New York with national public sector norms.
Policymakers should implement the innovative “risk-reward” approach included in the Tier VI proposal to share the downside risk of market downturns and benefit cost increases with employees.
Key Data
78%
— In 2009, 78% of state and local pension plans required employee contributions greater than 3.9%.
89%
— In 2010, New York State and its local government entities made 89% of total contributions to state-run systems, while employees contributed just 11%.
$8.3 Billion
— In 2009, the amount contributed to New York’s local pension plans was $8.3 Billion, representing nearly one-third of the national total.
7:1
— New York’s ratio of employer to employee contributions for local systems is 7:1, compared to a national average of 4:1.
Governor Cuomo's Tier VI proposal introduces an optional 401(k)-style defined contribution plan for new public employees, offering greater portability and flexibility compared to traditional pension systems. This approach aligns public sector retirement benefits with modern career paths, where individuals frequently change employers, and reflects a broader shift toward defined contribution models already common in the private sector.
Key Data
4%
— The proposed employer contribution rate for the Tier VI 401(k)-style plan.
7%
— The maximum employer contribution rate for the Tier VI 401(k)-style plan.
76%
— The share of full-time private industry workers participating in defined benefit pension plans in 1986.
24%
— The share of full-time private industry workers participating in defined benefit pension plans in 2008.
58%
— The percentage of private sector employees with access to defined contribution plans in 2011.
30%
— The percentage of state and local government employees with access to a defined contribution plan.
New York's public pension system relies heavily on state funding, with employee contributions accounting for only 1% of total revenues compared to the 8.5% national average. To address this disparity, the state is considering a modernization proposal that would require public employees to contribute between 3% and 6% of their salaries toward their pensions, alongside a risk/reward mechanism to adjust contributions based on investment performance.
Recommendations related to Tier 6 Pensions
The state should adopt the Governor's proposal to modernize the pension system by increasing the contributions required of public employees to between 3% and 6% of their salary.
The state should implement a “risk/reward” provision that would reduce employee contributions if investment earnings are flush and increase the required contributions if the level of contribution required by employers exceeds a certain rate.
Key Data
11.5%
— Employee contributions as a share of combined employee and employer contributions to New York State’s pension systems.
33%
— The U.S. average of employee contributions as a share of combined employee and employer contributions.
1%
— Public employee contributions as a share of total revenues (contributions plus investment earnings) in 2010 for New York State’s pension systems.
8.5%
— The U.S. average of public employee contributions as a share of total revenues.
47th
— New York’s systems ranking among states for public employee contributions as a share of total revenues.
3% to 6%
— The range of contributions required of public employees under the Governor's modernization proposal.
New York's public pension costs are rising rapidly, with state, city, and MTA expenses projected to reach billions of dollars by 2014, placing a significant burden on taxpayers. To address this, proposed reforms include increasing the retirement age to 65, requiring higher employee contributions, and offering a 401(k)-style retirement option to ensure long-term fiscal sustainability.
Recommendations related to Tier 6 Pensions
Future employees who opt for the traditional defined benefit plan should contribute between 3% and 6% of their paychecks toward their pensions, depending on their income.
The retirement age for new employees should rise from 62 to 65, consistent with national trends.
New employees should be barred from including overtime in pension calculations, as is the case for the vast majority of public employees in the country.
New employees should be given the opportunity to enroll in a 401(k)-style plan, allowing them to take their retirement benefits with them if they leave state employment.
Employees opting for the 401(k)-style plan should be able to have up to 10% of their salary deposited in a retirement account if they choose the full matching program.
Key Data
$574
— Amount New Yorkers pay per person per year in taxes for public employee pensions, which is more than twice the national average.
$8.6 billion
— Projected New York City pension costs by FY 2014, up from $2.4 billion in FY 2004.
$1 billion
— Projected MTA pension costs in FY 2014, rising from $314 million in FY 2004.
$123 billion
— Estimated savings for taxpayers throughout New York State over the next 30 years resulting from the proposed pension changes.
30%
— Percentage of MTA payroll that pension costs will total by FY 2014 without reform.
19%
— Percentage of MTA fare and toll revenue that pension costs will consume by FY 2014 without reform.
New York's public pension costs are significantly higher than the national average, with New York City and the MTA facing unsustainable growth in expenditures. Implementing a new package of pension benefits for new employees is projected to save state and local governments $123 billion over the next 30 years.
Recommendations related to Tier 6 Pensions
The governor should use his strong hand in the budget process to bring about more affordable pension benefits at all levels of government.
A pension reform proposal should be included in the governor's budget.
The Legislature should swiftly adopt the pension reform proposal.
New York should implement a new package of pension benefits for new employees to bring the state more closely in line with national norms.
Key Data
$123 billion
— Savings for New York state and local governments over the next 30 years from a new package of pension benefits for new employees.
$8.6 billion
— Expected New York City pension costs by FY 2014.
$1 billion
— Expected MTA pension costs for subways, buses, bridges, and tunnels by FY 2014.
$2 billion
— Expected state government pension costs by FY 2014.
14%
— Average annual growth rate of New York City's pension costs from FY 2004 to FY 2014.
40%
— Percentage of payroll that New York City's pension costs will amount to by FY 2014.
New York's public employee pension costs have grown significantly, creating a competitive disadvantage and placing a heavy burden on state and local budgets. To address this, the state should adopt the proposed "Tier VI" pension reform, which would align benefits with national norms and generate substantial long-term savings for taxpayers.
Recommendations related to Tier 6 Pensions
The Governor should include the Tier VI pension reform plan in the Executive Budget, and the Legislature should adopt it in a timely manner.
The Tier VI proposal would require new participants in the three State and three City pension funds to contribute 6 percent of their pay during their entire period of employment.
The Tier VI proposal seeks to establish a “normal” retirement age of 65 for new workers.
The Tier VI proposal would create a common vesting period of 12 years for all the pension plans.
The Tier VI proposal would eliminate overtime from the final average salary calculation for new employees.
Key Data
$455 million
— State pension payments in fiscal year 2004, which grew to $1.5 billion by fiscal year 2011.
$2.4 billion
— New York City's pension payments in fiscal year 2004, which grew to nearly $7.0 billion by fiscal year 2011.
$93 billion
— Estimated savings for New York State and local governments over 30 years under the Tier VI proposal.
$30 billion
— Estimated savings for New York City pension systems over 30 years under the Tier VI proposal.
$123 billion
— Total estimated savings for all reforms combined over 30 years.
$314 million
— MTA pension costs in 2004, which grew to $803 million by 2011.
The state and local pension system requires reform through the Governor's "Tier 6" proposal, which includes increasing the retirement age, adjusting benefit calculations, and raising employee contributions. Implementing these modifications is projected to generate over $120 billion in savings over the next 30 years.
Recommendations related to Tier 6 Pensions
The state should pursue reform of the state and local pension system along the lines of the Governor’s “Tier 6” proposal, which calls for an increased retirement age, more reasonable ways of calculating benefits, higher employee contributions, and other modifications which will save over $120 billion in the next 30 years.
Key Data
$120 billion
— Projected savings over the next 30 years from implementing the Governor’s “Tier 6” pension reform proposal.
The proposed legislation allowing school districts to borrow for pension costs should be vetoed to prevent the undermining of the property tax cap and the shifting of financial burdens onto future students. Instead of borrowing, the state should prioritize implementing sustainable, long-term pension reforms, such as the proposed Tier 6, to address rising costs.
Recommendations related to Tier 6 Pensions
I urge you to veto A6309/S4067, the bill that would allow school districts to borrow, in 2012 and 2013, an amount equal to 125 percent of their required 2011 pension contributions and to repay them over 15 years.
The solution is not to kick the can down the road but to implement real and lasting changes to pension benefits that will make them sustainable over the long run.
Please veto A6309/S4067 to guarantee that a new tier becomes a high priority for every taxpayer and school district official in New York State.
Key Data
$211 million
— Employer contributions to the New York State Teachers’ Retirement System in 2000.
$925 million
— Employer contributions to the New York State Teachers’ Retirement System in 2010.
16 percent
— Average annual growth rate of employer contributions to the New York State Teachers’ Retirement System from 2000 to 2010.
New York's pension system requires structural reform to address rapidly escalating costs that have forced municipal budget cuts and threaten long-term fiscal stability. Implementing changes such as raising the retirement age, increasing employee contributions, and eliminating pension padding would generate significant long-term savings for both the state and New York City.
Recommendations related to Tier 6 Pensions
The state should increase the retirement age to 65, ensuring that even uniformed employees who retire after 20 or 25 years of service do not receive benefits until that age.
The plan should require a 6 percent contribution from all employees for their entire length of service to bring contributions closer to national norms.
Legislators should eliminate "pension padding" by calculating benefits based on the highest five years of earnings and excluding overtime pay.
The state should cap maximum eligible wages at $179,000 for the purpose of calculating pension benefits.
The proposal should implement an "anti-spiking cap" to exclude extraordinary increases in income in any single year from benefit calculations.
Key Data
$1.5 billion to $7 billion
— The growth in New York City pension costs since 2002.
$8.7 billion
— The projected cost of New York City pension contributions in 2015.
$93 billion
— The total 30-year savings for state and local governments resulting from the proposed pension changes.
$30 billion
— The total 30-year savings for New York City resulting from the proposed pension changes.
9 to 1
— The current ratio of employer contributions to employee contributions in New York pension funds.
6.4 percent
— The nationwide mean contribution rate for state and local workers with a fixed contribution requirement.
The Governor's 2009 deficit reduction proposal failed to address rising employee compensation costs, specifically stalling negotiations on the creation of a new pension tier that could have provided long-term local budget relief. This omission left a significant opportunity for structural budget improvement unaddressed while the state relied on short-term fixes to close a $3.2 billion deficit.
New York State faces a pension funding crisis where public employers are projected to increase annual contributions by 60% starting in 2011 to meet obligations. To address this, the state should maintain full funding requirements and enact a new, less costly pension tier rather than borrowing against future funds.
Recommendations related to Tier 6 Pensions
New York’s full funding requirements should not be changed.
The Legislature must curb the tendency to enrich benefits.
The Legislature must immediately enact a new, less costly pension tier.
Key Data
60%
— Projected increase in annual contributions public employers in New York State will have to make to fully meet pension obligations starting in 2011.
New York's pension costs are skyrocketing, threatening the fiscal health of local governments and school districts due to the accumulation of permanent benefit sweeteners. Legislators should reject further pension enhancements and instead support the creation of a new, more affordable pension tier for future workers.
Recommendations related to Tier 6 Pensions
Legislators should refrain from introducing or supporting any pension sweetener legislation during the remainder of the legislative session.
Legislators should support the legislation endorsed by Governor David Paterson and New York City Mayor Michael Bloomberg that would create a new pension tier for future workers.
The state should create a new pension tier for future workers that provides more reasonable and affordable pension benefits.
Key Data
$292 million
— Required employer contributions to pension funds in 1999.
$2.6 billion
— Required employer contributions to pension funds in 2009.
$5.6 billion
— Total pension benefit payments reached in 2008.
78 percent
— Amount by which the local tax burden in New York exceeds the U.S. average in dollars per $1,000 in personal income.
9 to 1
— Ratio of employer to employee contributions in New York’s State and Local Retirement Systems.
86 percent
— Percentage of uniformed employees who retired in 2008 under the age of 60.
Uniformed employees in New York State currently receive significantly more generous pension benefits than civilian counterparts, with 86 percent of recent retirees under age 60 receiving annual payments between $48,900 and $66,586. To effectively control rising pension costs, new uniformed hires must be included in Tier V rather than being granted exemptions that perpetuate existing inequities.
Recommendations related to Tier 6 Pensions
The Governor should veto A3426/S1409 to prevent the extension of Tier II provisions to new police and fire hires.
New uniformed employees must be eligible for Tier V benefits along with civilian employees to effectively curb rising pension costs.
Any effort to exempt uniformed employees from Tier V, even on a temporary basis, should be rejected.
The Governor should resist any effort to exempt certain classes of employees from the provisions of the new pension tier.
Key Data
86 percent
— of uniformed employees who retired from the New York State Police and Fire Retirement System were under the age of 60.
$48,900 to $66,586
— is the range of annual lifetime pension payments for uniformed employees who retired last year.
20 percent
— of salary is the required employer contribution to fund the pension of a uniformed employee.
11 percent
— of salary is the required employer contribution to fund the pension of a civilian employee.
No results for your current filters. Manually edit your filters, or
clear the filters.
Share Feedback
Give a star rating, write a comment of at least 10 words, or both.
