March 5, 2009

Paterson Unveils Retirement Plan

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While Cornell is providing incentives for its staff to retire early in order to conserve funds, Gov. David Paterson (D-N.Y.) is proposing a new system to delay individual retirement in order to improve the finances for the state of New York.
In Paterson’s 2009-10 budget proposal, he recommended adding a new “tier” to the public-employee retirement program. According to The Ithaca Journal, this Tier V would reset the minimum retirement age from 55 to 62, while still including full benefits for employees. The new tier would also mandate employees provide a portion of their salaries toward total pension costs for the duration of their careers, rather than just 10 years as stipulated under the current system. In addition, if this proposal were accepted, a public employee would have to serve for 10 years in order to draw a pension, an increase from the current level of five years. In an effort to minimize “salary spiking”, the new plan would not allow overtime compensation to be included when calculating pension benefits.
The new proposal was a creation of Paterson’s Budget Division. The proposal’s institutionalization would translate into an estimated savings of $48.5 billion dollars over 30 years according to a state report. Taxpayers outside of New York City are estimated to save around $32.2 billion. New York City itself would save around $16.3 billion over that three-decade span.
“The changes I have proposed will continue to deliver a secure retirement for pensioners, but at a more affordable cost to taxpayers,” Paterson said in a statement. “We must use our current fiscal crisis as an opportunity to make smart choices today that will pay big dividends in the future, particularly for overburdened local property taxpayers.”
This recommendation comes as the state of New York is facing a $14 billion deficit amidst a tumultuous economic climate. A new spending plan that either will or will not include this new retirement proposal will have to be decided by April 1 as the new fiscal year begins.