Pension tug-of-war : NYC officials battle over pension reform
STEPHON JOHNSON Amsterdam News Staff | 3/2/2012, 1:07 p.m.
The five pensions that the comptroller oversees are the New York City Employees Retirement System, the Teachers Retirement System of the City of New York, the New York City Fire Department Pension Fund, the Board of Education Retirement System of the City of New York and the New York Police Pension Fund.
However, among all of the political football stands the public employees and unions themselves. Korn said the unions aren't the problem and that the pension reform pushed by Cuomo is a continuation of the war on the middle class.
"If you go back over the past 15 years, public employees have been putting 3 percent of their pay into the system while the employer has put in an average of 4.2 percent," said Korn. "Two years ago, the legislator presented a Tier 5 pension reform bill that [then Gov.] David Paterson said would save New York taxpayers $35 billion. To come back two years later with another proposal that would strip away retirement security for middle-class workers, for public servants who are often making less than what the private sector pays similar workers--with the same level of experience and education--is insulting.
"The typical employee pension is about $19,000 a year," continued Korn. "One-tenth of 1 percent of public pensions are six figures. Those tend to be higher-ranked officials like superintendents, not bus drivers. New York's public sector systems are strong and adequately funded. The only thing that's changed is that the 2008 stock market crash caused actuaries to increase what employers have to pay towards pensions."
Korn also told the AmNews that during a six-year stretch from 1997 to 2003, teachers were putting in 3 percent of their pay into pensions and taxpayers were paying 1 percent or less.
"Where were the critics of this exact same pension plan when employees were putting in more?" asked Korn. "The wealthiest New Yorkers, who don't need pensions, are the ones funding this effort to strip the funding of middle-class workers."
Korn also said that pensions being funded by taxpayers are a myth, and that the reality is that over half of the total pension fund is gained through investments, not taxpayer money.
Another thing that has been lost among the debate is how pension reform would disproportionately affect Blacks and Latinos, who make up a significant chunk of the public labor force. However, it wasn't always this way. Tier 1 through Tier 3 pension plans were put together back when the majority of New York State's public sector workers were white. According to a spokesperson for DC 37, the largest public union in New York City, Tier 4 was when the idea of pension reform really started kicking in...right when the color of most public employees had changed. "The economic disparity is unconscionable," the spokesperson said.
Public pensions, especially for those who stay in New York after retirement, also contribute to the state's economy. According to a study by the National Institute for Retirement Security, for every dollar invested in pensions by taxpayers, $10 in total economic activity occurs. In 2009, according to Korn, the teacher retirement system paid out over $5 billion in benefits to retired teachers, and most of that money was paid to retirees who lived in New York State and spent money in New York State. With money circulating back into local businesses, Korn said it had "a spin-off effect."
However, that spin-off effect might spin away for New York's public employees and New Yorkers, period.