Re-evaluate public pensions
Local lawmakers would be wise to support the drumbeat for pension reform at the state level.
A prolonged rise in the stock market has allowed a decrease in local contributions to the Employees Retirement System and the Police and Firefighters Retirement System. Thomas DiNapoli, state comptroller, announced in September the state was cutting local municipalities’ contribution rates for the Employees Retirement System roughly 9 percent from 20.1 percent of payroll to 18.2 percent of payroll and to the Police and Fire Retirement System by about 11 percent from 27.6 percent of payroll to 24.7 percent of payroll.
This is a nice break, but no one should get used to continued decreases in the pension contribution rate. They will be on the rise again the next time the stock market goes into an inevitable decline phase.
That makes this as good a time as any to re-evaluate the way we pay for public worker pensions. Things like Tier 6 or increasing retirement age and length of service stipulations to receive a full public pension are half-measures. Beyond that are defined-contribution plans, which are similar to the 401(k) plan most workers have, rather than the current defined-benefit plans for public workers.
A hybrid plan espoused by E.J. McMahon of the Empire Center for New York State Policy, in which a minimal safety net defined-benefit plan is available in conjunction with a defined-contribution account, could change the system enough to bring repeatable cost savings to taxpayers.
The skyrocketing amounts paid into the system since the late 1990s should be evidence enough that major changes to the system are called for rather than tinkering around the edges. It would be unfortunate if two years of declining pension contribution rates lulled local and state lawmakers into believing New York has solved its pension issue.