Albany Igniting Pension Time Bomb, Fitzpatrick Warns
July 6, 2010
Assemblyman Michael Fitzpatrick (R,C,I-Smithtown) blasted an Assembly bill which would allow the state pension fund to borrow money in order to make mandated contributions to the same state employee retirement system. The lawmaker called on Governor David Paterson and state legislators to take swift and immediate action to crack down on skyrocketing pension costs that are undermining New York’s fragile economic recovery instead of passing a dangerous amortization plan. Fitzpatrick recently reintroduced pension reform legislation that would shift state employees out of the state retirement system and into a 401(k)-type plan. Assembly bill 6932 would focus on political appointees and elected officials who simply hang on long enough to maximize current plan benefits even though their public servant’s zeal has morphed into a zeal for job security. Various newspaper reports point to a $3 billion increase in taxpayer-funded pensions over the last nine years, with the number of public retirees earning $100,000-plus pensions jumping dramatically. In the last year, the private sector has shed 7.4 percent of its workforce; meanwhile, only 1 percent of public-sector employees have been reduced during this period. While workers statewide have a vested interest in their pension plan, “pension padding,” a term commonly used to describe public employees who cram in extra overtime during their final years on the job, continues to occur with no real reform in sight. “The Assembly Majority’s actions mark a turning point for New York’s taxpayers,” said Fitzpatrick. “With its dubious ‘pension amortization’ scheme, Albany has placed us on the road to fiscal disaster. A pension-borrowing plan assumes two things: that the balance of the state’s retirement fund will improve to the degree that there is enough to pay future retirees; and that the interest New Yorkers will owe after six years of borrowing can be paid back without drastically increasing taxes. Both assumptions are false.” “My proposed reform 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 3 percent of the worker’s annual compensation to the plan, which would be administered by financial organizations contracted by the state comptroller,” said Fitzpatrick.