EDITOR'S NOTE: Changes to the Tier 6 retirement plan, including a reduction in the retirement age to 58 only for teachers, have now been finalized following further negotiations between state and labor leaders. Some of the details of the changes to Tier 6 outlined in this article are now out of date.
View the most recent Tier 6 updates in our updated reporting.
Under a near-finalized deal on proposed changes to the Tier 6 pension plan for the upcoming Fiscal Year 2027 New York State budget, all workers within Tier 6 with 30 years of service would be able to retire at age 58, down from age 63, pension contribution rates for all workers would be lowered and $30,000 of yearly overtime earnings would be counted towards workers’ final average earning calculation, up from $21,500.
The details of the tentative changes were outlined in a meeting of District Council 37 leadership and local presidents on May 13, according to several leaders who were in the meeting and other DC 37 sources.
“We didn’t think all of these changes would happen, but they did,” said one DC 37 source involved in pension negotiations. “It’s significant.”
Under the change to contribution rates, those earning $45,000 or less would maintain their contribution rate of three percent. For those in the salary brackets between $45,000 and $55,000, and $55,000 and $75,000, contribution rates would also be three percent, down from 3.5 percent and 4.5 percent respectively.
For those making between $75,000 and $100,000, contribution rates would lower to four percent from 5.75 percent, and contributions for those making between $100,000 and $125,000 would lower to 5.25 percent from the current six percent. The highest earners, those making over $125,000, would have their contribution rates set at 5.75 percent, down from the current six percent.
The source said Tier 6 negotiations have largely concluded after a week of intense back and forth discussions. However, pension proposals are still subject to change, another union source warned, until the budget is finalized.
A spokesperson for DC 37 said the union will wait to comment until the final budget passes.
Municipal unions across the state made implementing changes to the Tier 6 pension plan, which covers workers hired after April 2012, a central plank of their lobbying efforts in Albany this year. DC 37 pushed for changes to workers’ contribution rates, with Henry Garrido, the executive director of DC 37, telling The Chief earlier this year that it would be “much more beneficial for the city and its workers” to lower contribution rates, given that many city workers don’t last until retirement age.
The lower contribution rates will put hundreds, if not thousands of dollars back in workers’ pockets, effectively working as a mid-contract raise for tens of thousands of civil servants.
Lowering the retirement age was a key issue for the United Federation of Teachers and New York State United Teachers, whose original goal was to lower the retirement age to 55.
A spokesperson for the UFT said in an email that negotiations for Tier 6 changes are still ongoing.
The reforms to overtime were pushed by leaders of firefighter, police and other emergency service unions whose members often rake it tens of thousands of dollars of overtime pay each year. Vincent Variale, the president of Local 3621, the union representing EMS officers in the FDNY, said that increasing the amount of overtime that can be factored into pension payouts to $30,000 from the current $21,500 would be helpful for his members.
“We’re always understaffed so we’re always working overtime,” he said.
As of this year, around 780,000 workers in New York State are in Tier 6, making up 66 percent of all retirement system members. Pension contributions for workers in Tier 4 and Tier 5, those hired between Sept. 1, 1983 and March 31, 2012, are capped at three percent.
Negotiations for the state budget are still ongoing between Governor Kathy Hochul and leadership in the State Assembly and State Senate despite Hochul's announcement of a "general agreement" on a $268 billion state budget last week. Leaders in all three chambers have publicly supported Tier 6 reforms.
"First of all, we have to make sure that we have the workforce that provides the services for the rest of New Yorkers, and some of these jobs are hard to attract people to. We have a shortage of all kinds of healthcare workers, shortages of teachers, shortage of corrections officers," Hochul said in response to questions about Tier 6 changes on May 11. "As you know, there was a very expensive, ambitious plan put forth and this has been scaled back dramatically, but the details literally are being still worked out and we'll make sure you get them when they're done."
Comments
No comments on this item Please log in to comment by clicking here