The Wall Street Journal and Albany Times Union both report today that Governor Andrew Cuomo’s proposed public pension changes may include an optional defined-contribution retirement plan.  (See Update below.)

This would certainly put a better face on the otherwise disappointing set of proposed changes outlined in yesterday’s apparently orchestrated news leaks by the governor’s office. As summarized in an Associated Press account that first surfaced Monday morning, Cuomo’s “Tier 6” would reduce various aspects of the traditional defined benefit pension for new hires — raising the retirement age and the employee contribution, removing the bonus benefit “multiplier” for longer-term workers, increasing the minimum vesting period, and eliminating overtime from calculations. Such changes would reduce what actuaries term the “expected normal cost” to taxpayers of pensions for future workers, but it would not eliminate the open-ended financial risk, volatility and unpredictability inherent in a pure DB plan.

Neither the Journal nor the Times Union hinted at any details on the possible DC plan design or contribution levels. The Times Union does include this passage:

An analysis of pension benefits performed by the administration, obtained by the Times Union, showed the state could realize $60 billion in savings over 30 years from a defined contribution plan, but revising the defined benefit plan could yield $93 billion in savings.

Huh?  A DB plan couldn’t produce more “savings” than a DC plan unless the employer contribution is higher than the so-called “expected, normal rate” associated with the DB plan.  Indeed, any presumption of “savings” from a DB plan, especially in comparison with a DC plan, also has to be based on favorable assumptions about the rate of return on assets in the pension fund — which, of course, cannot actually be predicted with any certainty.

Cuomo, speaking in Long Island on Monday, said he’d send the Legislature a pension bill “in a matter of days,” but would not discuss further details.

UPDATE: The initial posting here overlooked a Daily News article reporting:

A version circulated by Team Cuomo last week called for an option of 401(k) plans for future elected officials and political appointments, sources said.

The provision since has been stripped from the latest version.

“Maybe he knew they’d never get it,” said one source who saw the original proposal.

Cuomo’s spokesman Josh Vlasto said talks are continuing.

“Talks” with whom?  Vlasto must be referring to state labor unions, which are now in contract negotiations, since the Legislature professes to be in the dark on Cuomo’s proposal.  However, the state Taylor Law specifically prohibits bargaining of pension issues.  Pension changes pre-cleared by unions are highly unlikely to include meaningful reforms; rather, “talks” will produce something much more like the meek Tier 5 plan signed by Governor Paterson in December 2009.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

You may also like

Remembering the scandal that brought down Health Commissioner Howard Zucker

The resignation of Dr. Howard Zucker as state health commissioner marks the end of a term marred by scandal over his role in managing the coronavirus pandemic. The much-debated compelling nursing homes to admit COVID-positive patients, though it origi Read More

After 10 weeks, all but five of the Empire Center’s 63 requests for pandemic data remain unfulfilled

Over the 10 days that Hochul has been in office, there has been no further progress on the Empire Center's record requests. Read More

New York’s health benefits remain the second-costliest in the U.S.

New York's health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S. The state's average total cost f Read More

Another Hochul To-Do: Timely Financial Reporting

The state will spend a record $212 billion in the current 2022 Fiscal Year, under the budget its elected leaders adopted in April. Read More

Can Cuomo still be impeached?

Andrew Cuomo and Donald Trump have more in common than boyhood homes in Queens. Like Trump, Cuomo could still face impeachment and an impeachment trial despite a promise to resign as Governor later this month. Read More

The Gov’s pension

There are several (dozens? hundreds?) of unanswered questions as the fallout from Andrew Cuomo's resignation earlier today continues. Among those are questions related to his pension, some of which can be answered, sort of. Read More

Sales Tax Receipts Surge Statewide, Filling Local Government Coffers

Local governments across every region of the state raked in robust sales tax collections during the three months that ended on June 30th Read More

The Health Department’s FOIL Responses Signal an Indefinite Wait for Pandemic Data

The quest for comprehensive data on New York's coronavirus pandemic hit a bureaucratic roadblock this week Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries:

Press Inquiries:


The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!