“While I applaud Attorney General Cuomo’s investigation into pension padding at the state and local government levels, no discussion regarding reform is complete without also addressing conflicts of interest created when politicians and their appointees help to regulate a multi-billion-dollar system from which they themselves directly benefit,” said Assemblyman Michael Fitzpatrick (R,C,I-Smithtown).
“In his July 7 report on pension padding, or ‘spiking’ - a practice in which public employees boost their salaries in their last years of work in order to take a larger retirement payment - the attorney general examined 50 government employers at the state and local levels and found pension padding occurring at 28. Because pensions in New York are calculated based on total income instead of base salary, combined with a bearish stock market that has left the state’s Common Retirement Fund underfunded in recent years, taxpayers are now being asked to pay an increasing share of public pensions for a widening pool of state, city, town, and village employees sometimes collecting larger retirement packages than their private-sector counterparts. In fact, according to one estimate, $2.5 billion of taxpayers’ money would go to foot such a bill every year if only 2 percent of employees statewide padded their pensions.
“Comprehensive pension reform, including an end to padding, is immediately needed in Albany. New York State’s pension fund may run out of money over the next decade if it fails to curb its mounting spending. This financial implosion would hit taxpayers especially hard during the longest recession since the Great Depression, while bloating pension costs continue to go unchecked. My proposed reforms, introduced in the Assembly this legislative session, would freeze the defined-benefit system for all elected officials and political appointees in the state. It would create a defined contribution plan, such as a 401(k), instead of the current defined benefit plan now funded out of state pension plan investment income or, when there’s a poor-market shortfall, by taxpayers. Employer governments would be required to contribute three percent of the worker’s annual compensation to the plan, which would be administered by financial organizations contracted by the state comptroller. I salute the attorney general for his investigation into pension padding, and I urge my colleagues to pass my pension reform legislation today. New York’s taxpayers can’t afford to wait any longer.”