The New York Legislature approved much of Gov. Andrew Cuomo's pension overhaul by offering a defined contribution option for the first time to some non-union employees and raising the retirement age for most new workers.
The deal was among a package of bills passed Wednesday and Thursday during an all-night session in Albany. Mr. Cuomo is expected to sign the measures.
Mr. Cuomo included the pension overhaul in his $132.5 billion budget proposal in January. He has said pension costs will consume 35% of local-government budgets by 2015, up from 3% in 2001. Thursday's deal is expected to save $80 billion over 30 years, Josh Vlasto, a Cuomo spokesman, said in an interview.
The pension overhaul affects only new workers in raising the retirement age for most employees to 63 from 62, and increases the contribution rate for those who earn more than $45,000 to between 3.5% and 6% from 3%. Those with an annual salary of less than $45,000 contribute 3%. It also reduces the percentage of the final average salary used to calculate annual retirement payments.
Mr. Cuomo originally sought a retirement age of 65 and a defined contribution option for every worker. Under the package that was approved, workers who aren't union members and earn at least $75,000 a year will be able to invest in the plan.
“This bold and transformational pension reform plan is a historic win for New York taxpayers and municipalities,” Mr. Cuomo said in an e-mailed statement Thursday. “Without this critical reform, New Yorkers would have seen significant tax increases, as well as layoffs to teachers, firefighters and police.”
The New York State Common Retirement Fund, the third-largest U.S. public pension with $140.3 billion, had 101.5% of the money to pay its obligations in 2010, better than any other state, according to an annual study by Bloomberg Rankings. To keep it there, the system has raised the contribution rates the state and local governments pay annually.