Tier 6 pension sweeteners are having an inevitable effect

In April 2024, the editorial board wrote of a proposed "fix" to the pension system's Tier 6 — the one that covers government employees who joined beginning April 1, 2012.

The potential changes, the editorial board said, "would hike pension costs for public employers, including local and state governments, schools, police departments and more."

Despite such concerns, the State Legislature and Gov. Kathy Hochul enacted those changes in the 2024 state budget. Additional "fixes" were made earlier this year. Those changes enriched the pensions of Tier 6 employees, through changing average salary calculations, lowering retirement ages, allowing police officers and firefighters to count more overtime toward their pensions, and even decreasing the amount many workers must contribute. 

It's not a shock then that Long Island municipalities are seeing pension costs escalate. Pension expenses for Long Island's towns and cities exceeded $137 million last year, increasing by 11% over 2024. That's on top of the 12.5% hike in 2023. Villages are seeing similar gains.

Now, those municipalities are struggling under the pension strain, on top of other increasing costs like employee health benefits. Taxpayers across Long Island will foot the bill and many local governments have pierced or plan to pierce the state's property tax cap.

Some elected officials seem surprised by the impact, while others say they have no alternative to raising taxes. Few elected officials voiced concerns when the proposals were discussed, and some even attended rallies supporting them. 

While the state comptroller does set the employer contribution rates tied to the new pension laws, local officials have the ability to soften the impact by adjusting spending. The rates are set and publicized two years in advance, giving officials time to make tough decisions about staffing, work rules and salaries that would lower pension costs, which are based on a percentage of payroll. The tradeoff is that may reduce services — but when affordability is a prime concern, that's an option residents may choose. 

State lawmakers of both parties paid little concern to the pension sweeteners' inevitable effect on taxpayers. They've now made changes to Tier 6 in 2022, 2024 and 2026 — election years when they were on the ballot and needed union support.

By 2028, some local employers may get a small break. State Comptroller Thomas DiNapoli announced last month that 2027-28 contribution rates would decrease slightly for the Employees' Retirement System, but increase for the Police and Fire Retirement System where the employee benefits are often higher.  

But the damage has been done. State officials argue that Tier 6 changes help to recruit and retain public sector workers. They haven't yet proved that point. They owe taxpayers clear evidence, with data, detailing the vacancies in New York's public sector jobs to show that New Yorkers made the decision to join government or stay in a government job primarily due to Tier 6 changes.  

Government employees deserve fair salaries and benefits. But everyone should remember that taxpayers, many of whom will never see a pension, are always on the hook.