Assembly Passes Additional Pension Reform to Reduce Costs for Taxpayers

May 25, 2010

Albany – Assemblymember Kevin Cahill (D-Ulster, Dutchess) announced the passage of a measure (A.11144) designed to save money for local and state governments and provide budgeting flexibility for 2010-2011. This bill establishes a temporary retirement incentive program for certain state and local government employees to assist in streamlining the workforce to achieve cost savings. Pension reforms passed last year, combined with this legislation, will also ease the burden on tax payers.

“Payroll and pension benefits make up a very large portion of government spending. This vote will help make sure our state and local governments have some of the tools needed to better bring costs under control over the long term,” said Assemblymember Cahill. “It is clearer than ever that we need to streamline services and this bill helps accomplish that goal through creating incentives for voluntary early retirement.”

This latest pension reform program will give participating governments the ability to better stabilize their long and short term finances while protecting vital services. This bill is a continuation of efforts to reform the state’s retirement system that started with the enactment of Tier V last year. Tier V is estimated to save the state up to $36 billion over the next thirty years and lower long term pension costs for school districts and all levels of government. This measure could add even more savings to that amount.

“Consolidation, streamlining and economies of scale are essential to reducing the cost of government,” said Assemblymember Cahill. “This bill would make the public sector workforce more efficient by voluntary attrition of positions determined to be less critical to the delivery of quality services. This will result in significant savings to the State and local governments.”

Presently, anyone who retires prior to 30 years of service is subject to a maximum 27 percent penalty. Under Part A of this program, employees have the option to receive one month of credit for every year of their service up to a total of three years or 36 months. Under Part B, early retirement penalties are waived for employees that have reached 55 years of age and achieved at least 25 years of service. In both cases qualified employees can retire without penalty.

The bill was referred to the Senate where it awaits a vote before being sent on to the Governor for approval. If you have any questions regarding the details of this legislation, please contact Assemblymember Cahill’s office at (518) 455-4436.

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