New York City Mayor Michael Bloomberg wants to reduce the cost of the city's pension system by consolidating some of its administration and raising the retirement age for new employees.
Both recommendations, made in his State of the City address Wednesday, will require new state laws, Marc LaVorgna, a spokesman for Mr. Bloomberg, wrote in an e-mailed response to questions.
Mr. Bloomberg said the city could save $8 million a year “right off the bat by consolidating pension systems, an administrative reform that will not affect benefits at all.” Mr. LaVorgna couldn't provide the current total administrative cost of the city's pension system.
The proposed consolidation would affect only one of the city's five pension plans — the $1.8 billion New York City Board of Education Retirement System, Mr. LaVorgna wrote. It would be consolidated with either the $35.4 billion New York City Employees' Retirement System or the $26.3 billion New York City Teachers' Retirement System.
In aggregate, the five New York City pension plans — including one for police and another for firefighters — had $109.6 billion is assets under management as of Oct. 31, according to the website of the New York City Comptroller John C. Liu, who manages the assets of the five pension funds.
“The mayor did include an important discussion of containing pension costs,” Mr. Liu said in a news release.” I wholeheartedly agree with the mayor's sentiments that government must live within its means.” He offered no detailed comment.
Speaking on raising the retirement age, Mr. Bloomberg said: “We'll seek a new tier for employees hired in the future that would raise the retirement age to 65 for non-uniformed workers. That would produce billions in long-term savings, and bring our retirement age in line with the private sector, even as we offer far more generous benefits.”
The current retirement age for city employees “varies some, depending on when an employee began work with the city and which union they are represented by,” Mr. LaVorgna wrote. “Generally speaking, most civilian employees can retire at age 57 if they have five years of city service. Teachers can retire at age 55 with a full pension if they have 25 years of service. They can retire at 62 with 10 years of service.” Current employees' retirement ages would not be affected.