The legislation puts in place a new Tier VI pension plan that includes:

•New Employee Contribution Rates: The new tier increases employee contribution rates in a progressive fashion to ensure lower paid state and local workers are not seriously affected. Employee contribution rates vary depending on salary:

o $0 – $45,000: 3%

o $45,000 – $55,000: 3.5%

o $55,000 – $75,000: 4.5%

o $75,000 – $100,000: 5.75%

o $100,000+: 6%

These rates remain substantially lower than the large majority of similar state systems around the country. The new tier impacts only newly hired employees. Existing employees and retirees retain all benefits.

•Increase of the Retirement Age: The pension reform includes an increase in the retirement age from 62 to 63 and includes provisions allowing early retirement with penalties. For each year of retirement prior to 63, employee pension allowances will be permanently reduced by 6.5%.

•Readjustment of Pension Multiplier: Under Tier VI, the new pension multiplier will be 1.75% for the first 20 years of service, and 2% starting in the 21st year. For an employee who works 30 years, their pension will be 55% of final average salary under Tier VI, instead of 60% under Tier V. This readjustment brings New York more in line with most other states and will save billions of dollars for taxpayers and local governments.

•Vesting: Under Tier VI, employees will vest after 10 years of service.

•Protect Local Governments From State Pension Sweeteners: The agreement requires the state to pre-fund any pension enhancers, ensuring that these costs are no longer passed to local governments.

•Adjustments to Final Average Salary Calculation to Help Reducing Pension Padding: The agreement changes the time period for final average salary calculation from 3 years to 5 years. To limit how much overtime can be used to determine an employee’s pension, pensionable overtime for civilian and non-uniformed employees will be capped at $15,000 plus inflation, and for uniformed employees outside of New York City capped at 15% of base pay. Tier VI puts in place new anti-spiking measures which cap growth in salary used to determine pension allowances at 10% for all employees statewide. These reforms will take major steps toward addressing instances of abuse and pension padding. Tier VI also eliminates lump sum payments of unused sick and vacation time from the calculation of final average salary.

•Voluntary and Portable Defined Contribution Option: The legislation includes an optional defined contribution plan for new non-union employees with salaries $75,000 and above. In the modern economy, employees often change jobs multiple times and need pension portability. Many states, the federal government, and most private employers provide some form of defined contribution plans to their employees. The state will make an 8% contribution to employee contribution accounts. Currently, SUNY and CUNY offer such an option through TIAA-CREF that has been successful and popular. This is a voluntary option for those employees who prefer the portability and vesting feature not available with defined benefit options, and will help attract top talent to state government.

•Adjustments to SUNY/CUNY TIAA-CREF Plan: Under Tier VI, SUNY and CUNY employees who elect the TIAA-CREF plan will receive an employer contribution of 8% of salary for the first 7 years of service and 10% thereafter.

•Limiting Number of Sick and Leave Days that Can Pad Pensions: Tier VI reduces by half- from 200 to 100- the number of sick and leave days that can be used for retirement service credit.

•Salary Reform: Previous tiers allowed salaries from an unlimited amount of employers for calculating retirement benefits. Tier VI allows only two salaries for the calculation.

•Limiting Pension Benefit of High Paid Employees: For new higher paid employees, the amount earned above the Governor’s salary (currently $179,000) will not be eligible for pension calculation under Tier VI.

Group releases document to help educate taxpayers on the realities of the proposed plan

The leaders of the Let New York Work coalition today fired back to dispel many of the myths that are being touted by groups that oppose the creation and implementation of a new retirement tier for state and local employees.  The document, titled Tier VI Pension Reform:  Myths vs. Realities, can be found at http://slidesha.re/xskNtz.

In his 2012-13 proposed state budget, Governor Cuomo introduced a new Tier VI Retirement plan for future state and local government employees.  In addition to a reduced Defined Benefit option, the plan also proposes a Defined Contribution option that mirrors the SUNY/CUNY model. 

“As the debate continues about the potential to save New York taxpayers more than $100 billion dollars over the next 30 years, it is imperative that people understand the realities of what is being proposed, said Brian Sampson, Executive Director of Unshackle Upstate speaking on behalf of the group. “Far too often people opposed to changing the system are using myths and scare tactics to confuse people.  Our goal today is to make sure that people understand the facts and hear from both sides of the issue.”

Let NY Work: A Common Agenda for the Common Good is a historic effort led by a coalition of prominent business, local government and educational organizations. The purpose of the initiative is to advance a six-point mandate relief agenda aimed at helping stabilize New York’s economy and provide a sense of security for all taxpayers.

Dear Friend,

Working together with Governor Andrew Cuomo, I recently voted to approve a personal income tax cut for hardworking, middle income New Yorkers — bringing the tax rate to the lowest level in 58 years. 

This tax cut will help make New York’s economy more competitive, while also saving you money.  

Another good way to save money is to make sure that you take advantage of any deductions and tax credits that may be available.

With tax preparation season now underway, it’s a good time to make sure you get the facts you need to save money for you and your family.  A great resource is the NYS Department of Taxation and Finance website, which is loaded with information to help you file your taxes accurately, on-time, and in the most cost-effective way possible.  Simply click on the link below to visit their website, which includes information on: 

• The new personal income tax rates;
• Easy-to-use Free-File and e-File features;
• How to request an extension; and
• How to get your refund safely and quickly through use of a debit card or direct deposit. 

You can visit the New York State Department of Taxation and Finance website at http://www.tax.ny.gov.

As always, if you have any questions, my staff and I are here to help.  Please feel free to contact my office at (716) 434-0680 or e-mail me at maziarz@nysenate.gov and we’ll do whatever we can to get you the answers you need.

Sincerely,

Senator George D. Maziarz
62nd Senate District