This study shows how greater fairness for New York taxpayers and competitive retirement benefits for government employees can be achieved by switching from the current defined benefit (DB) pension plan to the savings-based defined contribution (DC) model used by the vast majority of private companies.
Aside from sympathizing with the plight of New York City residents left to beg rides or trudge to work in frigid temperatures, Upstate New Yorkers probably assumed they didn't have much at stake in last week's transit strike.
State and local government workers enjoy pensions that far outstrip the norm for private-sector workers, most of whom have no guaranteed pension at all. Rising pension costs have been straining budgets for every level of government in New York, and future obligations will continue to climb as the number of retirees grows.
Among many other things, this transit strike has been a learning experience for a whole new generation of Yorkers too young to remember issues raised by municipal labor unrest of the 1960s and the fiscal crisis of the 1970s.
Disputes over wages, health insurance and work rules, are nothing new in transit negotiations. But one of the most contentious issues in the latest contract talks between the Metropolitan Transportation Authority and Local 100 of the Transport Workers Union has implications that go far beyond the cost of a MetroCard.
The employer share of pension contributions in New York has risen by more than $3 billion in the last five years, straining taxpayers throughout the state. Yet state legislators this year have passed dozens of bills—and introduced literally hundreds of others—that would further expand the already generous retirement benefits of government workers.
The State Legislature appears close to passing a significant change in the law governing how the comptroller invests New York’s $120 billion Common Retirement Fund for state and local employees. But the bill has potentially far-reaching implications that deserve more careful consideration—and a public hearing.
Adding to the pressure created by rising Medicaid and other costs, local governments and school districts all over New York are being hammered by massive increases in pension costs for public employees.