MAYOR BLOOMBERG’S PENSION REFORM PLAN

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The Mayor laid out some of the broad strokes of our pension reform agenda at his State of the City Address. Today, the Administration met with the Municipal Labor Committee to go through the details of the plan, which are below. The City’s “New Tier” legislation will make the following changes to the current pension benefit structure for employees of New York City and other covered public employers. Civilians and Teachers Retirement Age/Vesting · New Tier: Civilian hires and Teachers will vest after ten years of City employment and will be eligible to receive pension checks at the age of 65. · Current: Most employees can vest after 5 years and retirement ages vary, but are generally 57 years old for civilian and as low as 55 years old for teachers with 27 years experience. Employee Contributions · New Tier: Civilian Employees and teachers will contribute 5% of salary in all years of employment. · Current: Civilians contribute 4.85% for first 10 years, dropping to 1.85% for next 20 years. Teachers contribute 4.85% for first 27 years, dropping to 1.85% thereafter. Overtime · New Tier: Overtime does not count towards final salary calculation. · Current: Overtime does count toward final salary calculation. Teachers Tax-Deferred Annuity · New Tier: Elimination of fixed-return option for Teachers' Tax-Deferred Annuity (will be fixed at 0% going forward, immediately, for all participating members). · Current: 7.0% guaranteed rate of return. Uniforms New uniform employees of the Departments of Correction and Sanitation, along with new members of the Police and Fire Departments, will be covered by the "Tier 3" plan currently applicable to new Police and Fire hires, with some modifications. For years, Police and Fire new hires were allowed to go into the older "Tier 2," a more expensive plan because of an annual extender bill that passed every year in Albany. In June of 2009, Governor Paterson vetoed the bill, which caused new police and fire hires to fall into the less expensive Tier 3. The Mayor strongly applauded the Governor's bold action. This proposal would cement the Governor's action by creating a "uniform" pension benefit for all

of the uniform services, and includes some changes to the existing Tier 3, for police and fire. Police/Fire Retirement Age/Vesting · New Tier: vest after ten years and will be eligible to receive pension checks at the age of 65. · Tier 3: vest after five years, eligible to receive pension checks after hypothetical* 20th year of service with no minimum age. · Tier 2: vest after five years, eligible to receive pension checks after hypothetical 20th year of service with no minimum age. *(“Hypothetical, in this case, means that if you leave after five years, you are vested, but you must wait an additional 15 years, until you would have hypothetically had 20 years of service, to collect a pension check). Full Pension · New Tier: full pension benefits after 25 years. · Tier 3: full pension benefits after 25 years. · Tier 2: full pension at 20 years Employee Contributions · New Tier: 3% contribution for first 25 years. · Tier 3: same · Tier 2: varies between 0-3%, depending on employee age. Variable Supplemental Fund · New: Eliminates VSF payments for future and current retirees. · Current: After 20 years of service, $12,000 annual VSF payment to non-disability retirees. Final Average Salary Calculation · New Tier: Average of final 3 years salary. · Tier 3: Average of final 3 years salary. · Tier 2: Final year of salary only. Overtime · New Tier: Overtime does not count towards final salary calculation. · Tier 3: Overtime does count toward final salary calculation, with some limitations. · Tier 2: Overtime does count toward final salary calculation. Disability · New Tier: No disability presumptions, 44% of final average salary. · Tier 3: No disability presumptions, 44% of final average salary. · Tier 2: disability presumptions in place, 75% of last year salary.

Sanitation (the new tier exactly matches Police/Fire new tier) Retirement Age/Vesting · New Tier: vest after ten years and will be eligible to receive pension checks at the age of 65. · Current : vest after five years, eligible to receive pension checks after hypothetical 20th year of service with no minimum age. Employee Contributions · New Tier: 3% contribution for first 25 years. · Current: 8.35% for first 10 years, then 5.35% for next 10 years, then zero. Full Pension · New Tier: full pension benefits after 25 years. · Current: full pension at 20 years. Overtime · New Tier: Overtime does not count towards final salary calculation. · Current: Overtime does count toward final salary calculation, with some limitations. Disability · New Tier: No disability presumptions, 44% of final average salary. · Current: disability presumptions in place, 75% of salary. Corrections (the new tier exactly matches Police/Fire new tier) Retirement Age/Vesting · New Tier: vest after ten years and will be eligible to receive pension checks at the age of 65. · Current : vest after five years, eligible to receive pension checks after hypothetical 20th year of service with no minimum age. Employee Contributions · New Tier: 3% contribution for first 25 years. · Current: 7.61% for first 10 years, then 4.61% for next 10 years, then zero. Full Pension · New Tier: full pension benefits after 25 years. · Current: full pension at 20 years. Overtime · New Tier: Overtime does not count towards final salary calculation. · Current: Overtime does count toward final salary calculation, with some limitations. Disability · New Tier: No disability presumptions, 44% of final average salary.

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Current: disability presumptions in place, 75% of salary.

Variable Supplemental Fund · New: Eliminates VSF payments for current and future retirees. · Current: Starting in 2019, current and future officers with 20 years of service would have received a guaranteed $12,000 annual VSF payment.

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