News stories

State legislature passes retirement incentive bill

Early retirement legislation proposed by Gov. David Paterson was passed by both houses of the state Legislature on May 28, opening the door for local governments around the state to offer a retirement incentive to their employees.

The bill will allow public employees whose government employers opt into the plan to retire without penalty at age 55, provided they have a minimum of 25 years of service. According to the governor, the measure “provides state agencies and local government leaders with a tool to streamline the workforce and achieve critical cost savings.”

At press time however, even though they have threatened to lay off thousands of teachers, Mayor Michael Bloomberg and Chancellor Joel Klein have shown no interest in offering a retirement incentive in New York City.

“Bloomberg and Klein are choosing to ignore a time-tested, effective method for saving hundreds of millions of dollars while still keeping class sizes reasonable,” UFT President Michael Mulgrew said.

The governor’s bill provides a choice of two plans that local governments can opt into during a limited period. Part A would provide one month of additional pension service credit for each year of service, not to exceed three years, while Part B would allow eligible employees to retire at age 55 after 25 years of service with no reduction in benefits.

Under the bill, employers could opt to offer either or both plans, though employees would choose just one.

In a May 19 Daily News op-ed, Mulgrew reminded readers that an incentive has been used effectively in prior budget crises. In 1991, the city and the Board of Education offered an incentive that led to nearly 6,000 retirements in the Teachers’ Retirement System — well over double the number of the prior year. In 1995 and 1996, when another retirement incentive was offered to New York City public school educators, the TRS had 9,200 retirements, about as many as occurred in total over the next five years.

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