Results tagged “pensions”

The latest happy tidings from that fountain of good news named Albany warn that ballooning pension costs may drain local government coffers in the next six years. As reported in today's NY Times, an analysis from the state comptroller's office forecasts that state pension costs will triple to $8 billion by 2015, and the only solution is—you guessed it—there isn't one! Upset by that prospect, NY State Association of Counties Director Stephen J. Acquario tells the Times: "It’s alarming, eye-popping and unthinkable...Where is this money going to come from?" In keeping with local custom, no one in Albany can agree on an answer. Governor Paterson wants to limit pensions for new workers, while Comptroller Thomas DiNapoli thinks instead that counties should borrow money from the state to cover the costs. Others believe a tax increase will have to be in the offing, but of course, the legislature is a bit indisposed at the moment. A strong economic recovery could help matters, but what's the bottom line here? Cut benefits or bottom out, says Zvi Bodie at the Boston University School of Management: "Going forward, we’re going to have to promise less."

Governor Paterson hasn't winning any popularity contests in quite some time—maybe that's why he's played hardball yesterday, "stunning" people with his veto of the routine pension measure for police officers and firefighters that has been in place for almost thirty years. The plan allows newly hired employees to retire after 20 years at half salary.

Deputy Mayor Ed Sklyer warned that the city's pension costs threaten the city's financial health. According to the NY Post, he told the Citizens Budget Commission, "Defined benefit plans such as what the city has were designed in an earlier generation and are not only obsolete but unaffordable. The private companies that have them, such as GM, are facing bankruptcy and bailouts. The city will be in the same position if we don't get these costs under control." Because of rising pension and health benefit costs, Mayor Bloomberg and Governor Paterson support a bill that would ask city employees to work for at least 25 years (instead of the current 20) and retire at a minimum age of 50 before reciving pensions. The Post notes, "Uniformed employees, such as cops, can now cash out at any age after serving 20 years," and a previous Post editorial said currently, "10,381 retired police officers under the age of 50 are collecting pensions that average $43,000 -- plus an annual "Christmas bonus" of $12,000 each.

The FDNY announced yesterday that they would put a ceiling on how much overtime their firefighters could earn. The new cap will limit them to 81 and 1/4 hours per quarter, or 325 hours a year, for certain tasks that do not involve fighting fires or rescuing people. The change should also save on pension costs as well, with firefighters using overtime racked up in their final years to boost the salary used to compute how much their pension payments would be upon retiring. The Post says that with the new regulations, the earnings FDNY's top overtime earner last year would leave him "$65,407 less than he actually pulled in working in the Mayor's Office of Emergency Management and teaching mandated courses in equal employment opportunity." They were also able to find some disgruntled anonymous firefighters unhappy with the decision. One told the paper, "Closing firehouses is ridiculous, and so is cutting back overtime. Something is going to happen soon, and they're going to blame us."

While the two former cops convicted of carrying out murders for the mafia were sentenced to life in prison yesterday, the two men will continue to receive thousands of dollars each month in pensions. Since Stephen Caracappa and Louis Eppolito were charged with their crimes after retiring in the early '90s, their families will continue to receive the pensions, which cannot even be seized and used towards the millions in fines they have to pay as part of their sentence. Yael Perlman, the daughter of a gem dealer killed by the pair, said yesterday, "That's sick." Attempts to overturn the statutes that are paying out pensions to 450 corrupt officials have gone nowhere. Last year City Councilman David Yassky said, "It's a world that rewards people who lie, cheat, steal, take bribes, betray the public trust and embezzle public funds."

With the grim state of the city budget a hot topic these days, questions are being raised about how long we can continue to sustain the heavy financial burden that comes from the city's pension system for municipal retirees. Last year the city paid out a total of 9% of its budget ($5.6 billion total) for its pensions and analysts project that percentage is only expected to rise. Former NYPD officer and current State Senator Martin Golden told the Post, "Everything's got to be explored...The bottom line is everything's on the table."

Last month, the NY Times found that an actuarial consultant who reviewed legislation pending in the State Legislature also had financial ties to labor unions. The consultant, whose expertise was used to examine the financial impact of bills (like retirement, pension benefit bills), even admitted he skewed his analysis to support unions. Now, the city has found the consultant's work underestimated costs by $500 million.