CSEA Local 436

The nurses, library aides and bus drivers picketing on West Ridge Road in Rochester Thursday afternoon want people to remember one number: $14,000.

"That's an average pension of an average retiree for CSEA," says Bess Watts, a library worker at Monroe Community College. "Yet they're continuing to squeeze every dime and we've made sacrifices."

CSEA is the Civil Service Employees Association. About 15 members staged the impromptu demonstration after waking to hear of the all night legislative session that resulted in an agreement to change the pension system. "It should have never been part of the budget bill anyway," says Watts. "It's too complicated."

To be clear, none of the people holding home made signs will see any change to their retirement or pension under the agreement. Only people who are newly hired and will compromise a group called Tier VI.

Governor Cuomo had threatened a government shutdown without reform measures to the retirement and pension system. The question now is whether this compromise represents the "historic change" he sought.

The governor wanted to increase the retirement age by three years to 65. What he got was 63 - a one year increase.

He wanted a tiered system where workers who earn more pay more into their pension- in this case 4, 5, or 6 percent. Most workers will pay a half point increase over current tier V employees (3.5 percent). Though some will pay more and others less.

And Cuomo wanted a 401-K option for employees. What he got was a limited plan for non-union employees making more than $75,000.

This agreement limits- but does not ban entirely- the old practice of employees working lots of overtime late in their career to pad pension rates.

"I think it was a fair compromise," says Monroe County Executive Maggie Brooks. She says pension costs in the county have gone up 140 percent since 2010. Yet any real relief under this plan won't come until Tier VI hires make up a significant portion of the county payroll.

"Short term it doesn't really do anything to relieve the burden on taxpayers locally," says Brooks. "Twenty to 25 years from now it will be a significant impact on taxpayers."

Here's a quick rundown on Tier VI New Employee Contribution Rates:

The new tier increases employee contribution rates in a progressive fashion to ensure lower paid state and local workers are not seriously affected. Employee contribution rates vary depending on salary:

$0 – $45,000: 3%
$45,000 – $55,000: 3.5%
$55,000 – $75,000: 4.5%
$75,000 – $100,000: 5.75%
$100,000+: 6%

These rates remain substantially lower than the large majority of similar state systems around the country. The new tier impacts only newly hired employees. Existing employees and retirees retain all benefits.

Increase of the Retirement Age: The pension reform includes an increase in the retirement age from 62 to 63 and includes provisions allowing early retirement with penalties. For each year of retirement prior to 63, employee pension allowances will be permanently reduced by 6.5%.

Readjustment of Pension Multiplier: Under Tier VI, the new pension multiplier will be 1.75% for the first 20 years of service, and 2% starting in the 21st year. For an employee who works 30 years, their pension will be 55% of final average salary under Tier VI, instead of 60% under Tier V. This readjustment brings New York more in line with most other states and will save billions of dollars for taxpayers and local governments.

Vesting: Under Tier VI, employees will vest after 10 years of service.

Protect Local Governments From State Pension Sweeteners: The agreement requires the state to pre-fund any pension enhancers, ensuring that these costs are no longer passed to local governments.

Adjustments to Final Average Salary Calculation to Help Reducing Pension Padding: The agreement changes the time period for final average salary calculation from 3 years to 5 years. To limit how much overtime can be used to determine an employee's pension, pensionable overtime for civilian and non-uniformed employees will be capped at $15,000 plus inflation, and for uniformed employees outside of New York City capped at 15% of base pay. Tier VI puts in place new anti-spiking measures which cap growth in salary used to determine pension allowances at 10% for all employees statewide. These reforms will take major steps toward addressing instances of abuse and pension padding. Tier VI also eliminates lump sum payments of unused sick and vacation time from the calculation of final average salary.

Voluntary and Portable Defined Contribution Option: The legislation includes an optional defined contribution plan for new non-union employees with salaries $75,000 and above. In the modern economy, employees often change jobs multiple times and need pension portability. Many states, the federal government, and most private employers provide some form of defined contribution plans to their employees. The state will make an 8% contribution to employee contribution accounts. Currently, SUNY and CUNY offer such an option through TIAA-CREF that has been successful and popular. This is a voluntary option for those employees who prefer the portability and vesting feature not available with defined benefit options, and will help attract top talent to state government.

Adjustments to SUNY/CUNY TIAA-CREF Plan: Under Tier VI, SUNY and CUNY employees who elect the TIAA-CREF plan will receive an employer contribution of 8% of salary for the first 7 years of service and 10% thereafter. Limiting Number of Sick and Leave Days that Can Pad Pensions: Tier VI reduces by half- from 200 to 100- the number of sick and leave days that can be used for retirement service credit.

Salary Reform: Previous tiers allowed salaries from an unlimited amount of employers for calculating retirement benefits. Tier VI allows only two salaries for the calculation. Limiting Pension Benefit of High Paid Employees: For new higher paid employees, the amount earned above the Governor's salary (currently $179,000) will not be eligible for pension calculation under Tier VI.