House releases pension plan that would reduce benefits for future employees
The House Ways and Means Committee on October 31 released its version of a pension bill that is similar to a bill passed by the Senate in September with a few key differences. The MTA is currently analyzing the House plan and expects to file amendments to it. The House has not yet scheduled a floor vote on the bill, but it could be taken up as soon as Wednesday, November 2.
The House bill, like the Senate plan, would affect new state and municipal employees by requiring them to work longer to reach the maximum benefit level. In addition, pension benefits would be based on the highest five-year salary average, not the current three-year average. Both bills contain a modest increase in the cost-of-living-adjustment, raising the base on which the COLA is calculated from $12,000 to $13,000.
The House bill does not contain several provisions that the MTA had lobbied for and won in the Senate, including allowing higher education members who selected the Optional Retirement Program (a defined contribution plan) to switch to the state retirement system (a defined benefit plan).
On the plus side, however, the age at which a Group 1 employee would be eligible to retire and begin collecting retirement benefits is lower in the House bill. The Senate plan set 60 as the minimum retirement age while the House bill sets it at age 57. Under current law, it is age 55.
The MTA opposed changes to the pension system that would reduce future members’ benefits, arguing that members pay the vast majority of their own pension costs. The House and Senate leaders and the governor have argued that these changes are needed to reduce the state’s future pension liabilities and protect the state’s bond rating.
The MTA will update members as more information about the bill and possible amendments become available.