Touting the new Tier VI for the state's employee pension systems as saving municipalities from bankruptcy, Gov. Andrew Cuomo signed the overhaul into law on Friday afternoon.
Cuomo (D-New Castle) said in a broadcasted statement that such reform should have been passed years ago.
The governor argued that pension reform was necessary to avoid layoffs of public employees, to help taxpayers and to help businesses.
“It was that clear and that obvious," Cuomo said in his broadcast. The legislation was passed this week by the state legislature.
The new tier includes major changes, although they only affect new employees. In the broadcast, Lt. Gov. Robert Duffy described measures such as the introduction of a voluntary defined contribution plan similar to a 401(k) for non-union employees, salary calculations to reduce "padding" the costs of pensions, and employee contribution in proportion to how much they make.
Other notable measures include raising the retirement age, reducing the percantage of salary that can be collected under the pensions, and requiring that the state fund any enhancements to pension plans. The later measure restricts measures dubbed "pension sweeteners."
Officials in municipalities and school districts from throughout the region have complained that the pension system as it states is a costly unfunded mandate and one that contributes signifcantly to rises in property taxes. The call for changing the system has also come less than a year after Cuomo signed a property tax levy increase cap into law, which local and school officials argued unfairly restricts their ability to pay for state mandates.
To read more about the new pension tier, for details.