New York’s Mayor Michael R. Bloomberg announced a proposal on Wednesday that would end some of the city’s most generous pension provisions for its workers and save billions of dollars in the process. He said unless there is aggressive pension reform, the current system will soon bankrupt the city.
Bloomberg, who until recently, was considered an ally of the unions, is now in the position of drawing their ire.
Some of the proposed changes include mandatory 10 years of employment before new hires are eligible for benefits– double the current number of years, and require them to be at least 65 years old before receiving benefits. Currently, workers can begin drawing benefits as early as age 57, and many cops and fire fighters receive full benefits after 20 years, no matter how old they are.
Another proposed change would prevent employees from being able to use overtime wages in determining the base for their retirement pay, a controversial and widespread abuse known as “pension spiking.” City managers routinely allow retiring workers to load up on overtime in their final year before retirement, often increasing their pension payments by over 50 percent.
All new city employees would be required to pay more of their own monies into their retirement accounts, and some existing employees, mostly police and firefighters would lose some existing benefits, namely a $12,000 annual stipend they receive in addition to their regular pension.
“This reflects the dire fiscal circumstances the city faces, the devastating impact of increasing pension costs and the desperate need for aggressive reforms,” said Marc La Vorgna, a mayoral spokesman told the New York Times.
The current move is an about-face for Bloomberg, who in the past has used generous pension benefits as a way to keep the city’s 300,000 workers happy and prevent them from striking at times of contract negotiations. As recently as 2008, Bloomberg helped push through a new teachers union contract that included a pension provision allowing them to retire five years earlier than before, with full retirement benefits.
Later that same year, as the financial crisis was in full swing and wages were stagnant throughout the country, Bloomberg gave the city’s largest municipal union back-to-back 4 percent raises, without any concessions on pension benefits.
If successful, the changes could immediately save the city at least $200 million per year, although far larger savings, in the billions of dollars would be further down the road.
One union official, angry over the proposals, called Bloomberg a “dictator.” Harry Nespoli, chairman of the Municipal Labor Committee, an umbrella group of unions, said that Bloomberg had “has set back labor relations 40 years.” Nespoli added “We’re fed up with this. He’s going to have a battle. We’re just not going to roll over.”
Teachers union chief, Michael Mulgrew, called the mayor “insane,” and said that Bloomberg “has just decided, I’m going to attack, attack, attack everybody.”