St. Lawrence County could save $13 million in pension costs over 5 years with Tier VI
St. Lawrence County could save up to $13 million and Ogdensburg $2.7 million over five years thanks to new state pension plans that increase the retirement age and require greater financial contributions from employees.
The savings are possible through the Stable Rate Pension Contribution Option, according to a statement released Friday by Gov. Andrew M. Cuomo.Last year, Cuomo and the state Legislature put in place Tier VI, the new pension plan for all state and local government employees hired after June 2012.
With employees hired under Tier VI requiring a lower pension contribution rate by local governments, as new employees replace retiring workers, localities will see total pension contribution rates significantly decline and realize significant savings over the long-term.
The Stable Rate Pension Contribution Option allows local governments -- including counties, cities, towns, villages, and school districts -- to access the savings of Tier VI immediately, Cuomo said.
Cuomo said St. Lawrence County would save $3.7 million in fiscal year 2014, the first of the five years. Ogdensburg could save $800,000 in fiscal year 2014, he said.
Under the plan, localities are given the option for a stable pension contribution rate that significantly reduces near-term payments but still keeps the pension systems fully funded over the long term.
Local governments who opt in would avoid significant volatility in contribution rates and be better able to plan for the future. Though the locality receives short-term relief, because the contribution rate remains fixed, the total amount paid in to the fund by the locality would not be diminished over the life of agreement, thereby maintaining the fiscal stability of the pension fund.
The savings will better enable local governments and school districts to maintain necessary services to their residents and students, Cuomo said. The option is voluntary and requires approval from the appropriate trustee - either the Comptroller's office or Teachers' Retirement Board.
"The difficult financial pressures facing localities are well-known here in Albany, and my administration from day one has been committed to helping local governments meet their budgetary obligations as well as continue to provide critical services to their residents," Cuomo said.
"While the Tier VI reforms were a major step toward helping local governments deal with the pension crisis, we understand that more help is needed. For this reason, the Executive Budget proposed the Stable Rate option to offer local governments and schools a bridge to the long-term savings of Tier VI, as well as greater predictability."