ALBANY

State legislators are looking into the possibility of reversing pension reforms put in place since 2011 that reduced benefits for public employees. While these changes might help attract and keep workers, they could also raise expenses for local governments and schools.

In an attempt to manage surging pension costs, lawmakers established a new sixth tier, referred to as “Tier 6,” nearly 14 years ago. As a result, public servants hired after April 1, 2012, face lower benefits, longer periods until retirement, and higher contributions.

However, there’s now a growing movement to roll back some of these changes to enhance the appeal of public sector jobs. Union leaders express concern that employers are struggling to recruit staff, particularly in fields like corrections, nursing, and education.

“This is fundamentally an equity issue. Those in Tier 6 are contemplating their career paths and questioning if it’s truly worth it,” stated Melinda Parson, president of the New York State United Teachers Union, which represents around 700,000 members. “Public services are vital, and pensions should reflect that.”

What I found on Newsday

• State lawmakers are taking note. They are considering repealing the pension reforms that reduced benefits for civil servants hired post-2011. This might make jobs more enticing, but could also escalate costs for local governments and schools.
• Driven by sharp rise in pension costs Lawmakers created Tier 6 nearly 14 years ago, impacting civil servants hired after April 1, 2012, with decreased benefits, extended retirement periods, and higher contributions.
• But now a move toward rollback has begun. Changes might be enacted to enhance the attractiveness of public sector jobs, as union leaders highlight difficulties in recruiting correctional officers, nurses, and teachers.

Union leaders argue that enhancing benefits would not only draw new talent but also retain existing employees in various sectors, including public hospitals like Stony Brook University Hospital and Nassau University Medical Center, along with teachers, firefighters, police, and healthcare professionals.

Currently, there are approximately 708,000 members under Tier 6, as per recent data from the State Comptroller’s Office, the State Teachers’ Retirement System, and the New York City Office of the Actuary. The actuary noted that these changes generally don’t impact participants in the NYPD or New York City pension funds, which typically categorize new participants as Tier 3.

“Fixing Tier 6 is a pressing priority,” remarked Mario Cilento, president of the New York State AFL-CIO union, encompassing about 2.5 million members across 3,000 local unions.

Governor Kathy Hochul mentioned continued discussions around improving benefits, stating, “We need to approach this thoughtfully,” subtly acknowledging the financial implications.

Possible changes

What specific alterations will be made remains in discussion, but both union leaders and lawmakers suggest potential reductions in employee contribution rates, fewer required years of contributions, and a lower retirement age.

Hochul’s proposed $260 billion state budget for this year currently lacks these changes, but adjustments could emerge during negotiations with dominant Democratic leaders in both the Senate and Assembly, as the state budget is expected by April 1st.

With all 213 legislative seats up for election, labor unions are seen as significant allies for campaign financing and support.

“It’s not going to hurt the Democratic Party at all,” said Hank Sheinkoff, a political strategist with four decades of experience.

Nevertheless, fiscal watchdog organizations criticize the initiative to restore benefits. They contend this could raise employer contribution rates for state and local governments, health care facilities, and school districts, pushing costs upward each year.

“If Congress were to dilute Tier 6 reforms, pension costs would skyrocket,” warned Ken Girardin, a fellow at the Manhattan Institute, a conservative think tank. “Most of that cost will be borne by local taxpayers, which could severely impact school districts.”

Girardin estimates that reversing Tier 6 could impose over $100 billion in costs to taxpayers. “From a fiscal perspective, this is potentially disastrous for the governor,” he claimed.

make work attractive

Traditionally, civil servants have accepted somewhat lower pay compared to the private sector in exchange for improved retirement benefits, according to Cilento. “Unfortunately, Tier 6 has effectively stripped that away.”

Cilento further noted that in-demand fields, like nursing, are seeing existing workers burdened with excessive overtime, leading to burnout and turnover. This personnel shortage could diminish service quality, as highlighted by both union leaders and lawmakers.

The 2024-25 state budget, ratified in 2024, includes plans to significantly enhance retirement benefits for public employees while maintaining low contribution rates for those earning overtime. Payroll adjustments are projected to cost $377 million in the first year.

State Senator Jessica Ramos (D-Jackson Heights), chair of the labor committee, indicated, “This year, we will concentrate on advancing equity.” She has expressed a clear objective for this budget cycle: to standardize the employee contribution rate to 3% across the board, akin to Tier 5.

Senator Alexis Wake (R-Sayville) noted that states could also eliminate the mandated years of contributions for pension plans. Currently, Tier 6 employees pay a fixed income percentage throughout their careers, increasing as salaries rise.

“The country isn’t on the verge of bankruptcy,” Weick remarked, pointing out that technological advancements have reduced job availability since 2012.

Look at the numbers

Tier 6 workers are enrolled in various pension schemes.

NYS Employee Retirement System (ERS): 463,502

New York State and Local Police and Fire Retirement System (PFRS): 22,196

NYS Teacher Retirement System (TRS): 127,070

New York City Employees Retirement System (NYCERS): 95,353

Total: 708,121

Sources: NYS TRS, New York State Comptroller’s Office, New York City Office of the Actuary.

*NYCERS consists of five pension systems, including the New York City Employees’ Retirement System, the New York City Teachers’ Retirement System, and others. Typically, police and fire funds do not include Tier 6, hence their absence.

** Latest data from the state is from 2025, while city data is from 2024.