New York Gov. Andrew Cuomo on Friday signed legislation giving some future public employees a chance to choose between a 401(k) plan and a defined benefit plan, increasing their employee DB contributions and raising their DB plan retirement age.
Mr. Cuomo reiterated his claim that creating the new pension tier would save state and local governments, including New York City, more than $80 billion over the next 30 years.
The legislation was approved by both houses of the state Legislature earlier this week..
The law lets non-union employees making $75,000 or more a year choose between the current DB plan or a new defined contribution plan.
“This is a voluntary option for those employees who prefer the portability and vesting feature not available with defined benefit options, and will help attract top talent to state government,” Mr. Cuomo said in a news release Friday.
The law also raises the retirement age to 63 from 62 for newly hired public employees and reduces the payment formula — the pension multiplier — for calculating pensions for these employees.
On Thursday, Thomas DiNapoli, state comptroller and sole trustee of the $140.3 billion New York State Common Retirement Fund, Albany, said in an e-mailed statement that the new pension tier — called Tier 6 — “will reduce pension costs for new employees” but “will not significantly lower costs for local governments in the short run.”
Mr. DiNapoli said his office will review the Tier 6 requirements and “provide guidance to municipalities on implementation.”
