So, not everyone is happy with the governor’s 2012 budget proposal.  We’re quite pleased (read Unshackle Upstate’s response) but others, like PEF (Public Employees Federation), and CSEA (Civil Service Employees Association are a little less thrilled.  Both groups are radically upset about the proposed pension reform.

Governor Cuomo proposed that Tier VI be added to the pension system.  It offers the choice between a traditional defined benefit plan or a defined contribution, 401K style option.  Both of these options would be provided to NEW EMPLOYEES (meaning any employee already working for the state or local government are safe).  For the defined benefit plan, future workers would have to contribute a higher percentage of their pay…4-6% based on their annual wages.  They would also have to retire later (at 65 rather than at 62) and would no longer be able to pad their pension by working overtime.  The Defined Contribution Plan (like a 401K) would allow new employees to put up to 10% of their annual salary into the plan and would allow them to take their plans with them if they ever changed careers.  Both are reasonable and responsible options.

But not everyone shares our opinion.  CSEA President Danny Donohue, in a statement he released, said, “The governor’s proposal of a 401K style option as part of Tier VI would certainly be attractive to highly paid political appointees who could max out their contribution, have it matched by the public employer and take it with them as they come and go. It’s a lot different for front-line career employees who have to worry about whether being at the mercy of Wall Street ups and downs.”  True.  You can’t argue the fact that the market plays a factor.  But why should the public sector be any different than the average middle class taxpayer. 

Mr. Donohue also called Tier VI,  “an assault on the middle class and a cheap shot at public employees.”  REALLY?  Putting aside the fact that we are talking about people who are not currently employed, what about the middle class who do not work in the public sector yet carry the  burden of supporting the current pension programs?  They are being “assaulted” with escalating property tax bills.  By implementing Tier VI taxpayers across New York State will save nearly $80 billion over the next 30 years.  That is not an insignificant sum.  And taxpayer should no longer be forced to pay for something that they themselves do not receive…a guaranteed pension.

Another naysayer, PEF President Ken Brynien, also complains about the proposed defined contribution system, “The Tier 6 proposal is nothing more than a false choice of accepting severely reduced pension benefits or joining an inefficient 401k style pension system. It would force public employees into a pension gamble that virtually guarantees a lower level of benefits.”  Again, why shouldn’t public employees “gamble” the same way private sector employees have to?  We cannot create a protected class of workers.  That is simply unfair to the roughly 92% of New York residents that are not employed by the state or local governments. 

And let’s for a moment talk about choice.  Why shouldn’t future public employees, perhaps even current employees, have a say in how their retirement money is invested?  Everyone works to earn their retirement.  And pensions were never meant to be the sole source of income for people when they retire.  So let’s allow people the choice of where they invest their money and allow them to maximize that investment.

It seems to me to be quite disingenuous to try and protect people that are not currently employed while those of us today foot a heavy bill for current retirees.  Without Tier VI, the state, and taxpayers, won’t be able to support public pensions anyway, so it won’t matter.  We need reform not only so taxpayers across the state can continue to afford to live here, but also so public employees already in the system can receive the pensions they’ve already been promised.

So the gauntlet has been dropped and the battles will begin.  But let’s not forget that anyone who started their career and counted on the current pension system to support them in retirement doesn’t have to worry.  We’re talking about future employees.