Issues and events that shape Long Island's economic and legislative landscape.

Monday, September 26, 2016



Governor's New Pension Reform Plan Will Save Long Island Nearly $13 Billion Over The Next 30 Years

Empire State Development (ESD) President, CEO and Commissioner Kenneth Adams today joined Nassau County Executive Ed Mangano, Town of Brookhaven Supervisor Mark Lesko and Long Island Association President and CEO Kevin Law to hail Governor Andrew Cuomo's recently passed pension reform plan that will save Long Island nearly $13 billion over the next 30 years.

Empire State Development President, CEO & Commissioner Kenneth Adams said, "The passage of Governor Cuomo's new pension reform plan marks another milestone for a new New York. Under the new Tier Six plan, New York State will save more than $80 billion in pension costs over the next 30 years, including more than $12.8 billion for Long Island taxpayers. Families in Long Island struggle with some of the highest taxes in the nation so these pensiPressConf032112.jpgon savings will go far to reduce that burden. Furthermore, this money will go back into their communities so that local governments can deliver high quality public services, maintain essential positions, and invest in businesses. As the Governor rebuilds the Empire State, we thank County Executives Mangano and Bellone, Supervisor Lesko and President and CEO Law for their support."

Nassau County Executive Ed Mangano said, "Governor Cuomo's new pension reform plan is sensible and necessary for local governments like Nassau County to cope with surging pension costs. These costs have threatened our county's fiscal stability, but this Tier Six plan offers long-term savings. With more than $100 million in expected savings in the next five years and more than $6.5 billion in the next three decades, this plan helps protect taxpayers while affirming retirement security for current and future employees. I commend Governor Cuomo, Senate Majority Leader Skelos and Speaker Silver for passing this crucial plan."

Suffolk County Executive Steve Bellone said, "With his new pension reform package, Governor Cuomo has proved again his commitment to Long Islanders who need tax relief.  This Tier Six is important to Suffolk County's long-term fiscal health and allows us to better plan for the future.  I applaud the Governor for leading this effort and the Legislature for passing the plan."

Town of Brookhaven Supervisor Mark Lesko said, "The new pension tier proposed by the Governor and passed by the Legislature will provide relief to Brookhaven taxpayers for decades. For years, we called upon the state government to help with growing pension costs that seemed to have no end in sight. This new pension plan only applies to future employees and will have a real long-term impact on closing budget gaps and preventing tax hikes. On behalf of my community, I thank the Governor and the Legislature for a plan that will help to reverse the dramatic increases in pension costs to municipalities."

Kevin Law, President and CEO of the Long Island Association, said, "As governments on all levels strive to revitalize the economy, Governor Cuomo has led the way with his new pension reform plan. This plan brings about nearly $13 billion in future savings for our region which will help our counties and municipalities keep taxes down. Such significant savings will keep Long Island businesses more competitive - exactly what we need to rebuild the Long Island economy. I commend the Governor and Majority Leader Dean Skelos for their leadership on this important issue."

The state's rapidly growing pensions costs are one of the most expensive mandates for local governments. In 2002 pension payments from local governments were $1.4 billion and have grown to $12.2 billion in 2012, an increase of over 650%. The pension reform plan passed by the Senate and Assembly recognizes the unsustainability of the current system and takes unprecedented steps to control growth, saving state and local governments, including New York City, more than $80 billion over the next 30 years.

The Governor's pension reform will save Nassau and Suffolk Counties the following amounts:


Total 5 Year Savings

Total 10 Year Savings

Total 30 Year Savings

Nassau County




Suffolk County





The new law puts in place a new Tier VI pension plan for workers hired after April 1, 2012. Existing employees and retirees retain all benefits.  The new law includes:

  • New Employee Contribution Rates: The new tier increases employee contribution rates in a progressive fashion to ensure lower paid state and local workers are not seriously affected. Employee contribution rates vary depending on salary:
    • $0 - $45,000: 3%
    • $45,000 - $55,000: 3.5%
    • $55,000 - $75,000: 4.5%
    • $75,000 - $100,000: 5.75%
    • $100,000+: 6%

These rates remain substantially lower than the large majority of similar state systems around the country.

  • Increase of the Retirement Age: The pension reform law includes an increase in the retirement age from 62 to 63 and includes provisions allowing early retirement with penalties. For each year of retirement prior to 63, employee pension allowances will be permanently reduced by 6.5%.

  • Readjustment of Pension Multiplier: Under Tier VI, the new pension multiplier will be 1.75% for the first 20 years of service, and 2% starting in the 21st year. For an employee who works 30 years, their pension will be 55% of final average salary under Tier VI, instead of 60% under Tier V. This readjustment brings New York more in line with most other states and will save billions of dollars for taxpayers and local governments.
  • Vesting: Under Tier VI, employees will vest after 10 years of service.
  • Protect Local Governments From State Pension Sweeteners: The new law requires the state to pre-fund any pension enhancers, ensuring that these costs are no longer passed to local governments.
  • Adjustments to Final Average Salary Calculation to Help Reducing Pension Padding: The law changes the time period for final average salary calculation from 3 years to 5 years. To limit how much overtime can be used to determine an employee's pension, pensionable overtime for civilian and non-uniformed employees will be capped at $15,000 plus inflation, and for uniformed employees outside of New York City capped at 15% of base pay. Tier VI puts in place new anti-spiking measures which cap growth in salary used to determine pension allowances at 10% for all employees statewide. These reforms will take major steps toward addressing instances of abuse and pension padding. Tier VI also eliminates lump sum payments of unused sick and vacation time from the calculation of final average salary.

  • Voluntary and Portable Defined Contribution Option: The new law includes an optional defined contribution plan for new non-union employees with salaries $75,000 and above. In the modern economy, employees often change jobs multiple times and need pension portability. Many states, the federal government, and most private employers provide some form of defined contribution plans to their employees. The state will make an 8% contribution to employee contribution accounts. Currently, SUNY and CUNY offer such an option through TIAA-CREF that has been successful and popular. 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.
  • Adjustments to SUNY/CUNY TIAA-CREF Plan: Under Tier VI, SUNY and CUNY employees who elect the TIAA-CREF plan will receive an employer contribution of 8% of salary for the first 7 years of service and 10% thereafter.
  • Limiting Number of Sick and Leave Days that Can Pad Pensions: Tier VI reduces by half- from 200 to 100- the number of sick and leave days that can be used for retirement service credit.
  • Salary Reform: Previous tiers allowed salaries from an unlimited amount of employers for


    calculating retirement benefits. Tier VI allows only two salaries for the calculation.
  • Limiting Pension Benefit of High Paid Employees: For new higher paid employees, the amount earned above the Governor's salary (currently $179,000) will not be eligible for pension calculation under Tier VI.

The Governor's Executive Budget closes the current $2 billion budget deficit with no new taxes or new fees. It also proposes sweeping mandate relief and pension reform that will save taxpayers and local governments billions of dollars.