NY pension reforms will save $48.5bn

The New York State division of the budget found municipalities outside of New York City will realize savings of $32.2 billion over the next 30 years from Governor David Paterson's proposal.

And it said the City of New York would achieve additional savings through a companion proposal introduced by Paterson at the request of mayor Michael Bloomberg. The City has estimated savings of $200m next year and $16.3bn over the next 30 years from these initiatives.

Paterson said: "The changes I have proposed will continue to deliver a secure retirement for pensioners, but at a more affordable cost to taxpayers.

"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."

Bloomberg added: "Without reducing our pension and health-care bills, we could be forced to make cuts that could jeopardize the incredible progress we have made reducing crime, improving the schools and improving the quality of life in all five boroughs."
Paterson's proposals would create a new tier of pension benefits - Tier V - for most newly hired public employees.

Many of the proposed changes for Tier V would remove pension enhancements added in recent years.

These new rules include restoring the minimum retirement age from 55 to 62; requiring employees to continue contributing a percentage of their salaries towards pension costs for their entire careers rather than ending contributions after ten years; and restoring the minimum years of service required to draw a pension from five to ten years.