Today, Assemblyman Mike Fitzpatrick (R,C,I-Smithtown), arguably the strongest advocate in the state Legislature for reforming the public employee pension program, provided yet another reason why the state should look toward a defined contribution plan.
“The Central States Pension Fund, which represents over 400,000 unionized workers, currently finds itself in a situation where the fund is drying up, and it must now slash benefits to retirees. New York State could find itself in a similar state with its pension program in the near future,” warned Fitzpatrick. “Pension funds already have received approval from the federal government to ‘restructure’ and slice benefits; meaning thousands of New Yorkers who are members of the state pension program may lose out.”
The Central States Pension Fund is paying out $3.46 in benefits for every $1 it is bringing in, which puts it in red numbers by $2 billion annually. For this reason, retiree benefits may be cut by up to 60 percent. New York State’s constitution is structured in a way that currently does not allow for pensions to be cut. A constitutional amendment could change that.
“For years, I have been pleading with the state Legislature to transition the current defined-benefit pension program to a defined contribution, 401(k)-style plan,” Fitzpatrick said. “Such a plan is currently available to the instructional staff at all 64 institutions in the SUNY system and should be extended to all state workers. I have submitted legislation to do so; this also would ease the tax burden on our residents. My plan will protect state workers from what those enrolled in the Central States Pension Fund are going through, and it will protect our taxpayers from having to pay more in taxes to bail out our pension system when the same events inevitably happen here.”
Fitzpatrick is the prime sponsor of two bills aimed at reforming the pension system. Assembly Bill A4285 establishes a defined contribution system for state workers to enroll in, and Assembly Bill A4957 mandates that all elected officials be enrolled in the defined contribution program. He also sponsors A.4643-A to remove pension and retirement benefits from elected officials convicted of felonies related to their official duties.