New York’s horrible pension habits are a window on a national pension picture that’s looking more disastrous by the day.
Eileen Norcross and Todd Zywicki
NY Daily News
8/8/2010
He did nothing illegal. At 44, Hugo Tassone retired from the Yonkers police force with an annual pension of $101,333 – thanks to overtime pay he tacked on to his $74,000 salary. Tassone told The New York Times it was the pension he could collect after 20 years of service that attracted him to the job in the first place.
He’s not alone. In the last decade, half of the police and firefighters who retired in Yonkers collected pensions that exceeded their base pay, in (at least one case) by as much as 75%.
Don’t blame the officers. New York’s pension rules make it pay more to retire than to work. And the horrible habits here are a window on a national pension picture that’s looking more disastrous by the day.
Tacking on overtime is only one of a long list of union-won perks behind New York’s rising pension burden. To dodge a federal law capping public pensions to $195,000 a year, in 1997, Albany created a second fund for “excess benefits.” Twenty-eight New York employees, nearly all teachers, exploited the loophole, leaving taxpayers with a $6 million check this year alone.
These and other sweeteners are part of the reason why the city’s annual pension payout has increased 900% since 2000. And that’s before health care benefits are included. For every dollar police officers contribute to their retirement, taxpayers contribute nine. Mayor Bloomberg’s office warns that if one thing pushes New York City into bankruptcy again – 35 years after the last time – it will be pensions.
As Gov. Paterson pins budgetary balance partly on more federal money, and lawmakers throughout the state struggle to balance the books, they have no further to look than their own legislative records for the cause of New York’s growing fiscal stress. What is perfectly legal in New York’s pension systems is also not fiscally sustainable…
…Professor Joshua Rauh of Northwestern University projects that even if public sector plans earn 8% on their investments, four states – Illinois, New Jersey, Connecticut and Indiana – will run out of assets to pay retirees by the end of the decade. States and local governments will soon find themselves up against a painful tradeoff: between closing schools and libraries and cutting other essential services or paying inflated pensions to 50-year-old retirees…
