New York teachers can retire five years earlier under “Tier 6” pension reforms that passed Tuesday as part of the next state budget.
The $557-million plan, negotiated between Gov. Kathy Hochul and the New York Legislature, will lower the retirement age from 63 to 58 for all teachers who spent three decades in the classroom. It also reduces the contribution rate other government workers make toward their pensions.
The changes start to roll back the controversial pension changes passed under ex-Gov. Andrew Cuomo more than a decade ago in an effort to save the government money.
“Albany heard us and took a major step in correcting the injustice of Tier 6,” Michael Mulgrew, president of the United Federation of Teachers, said in a statement on Tuesday. “Lowering the retirement age for educators from 63 to 58 after 30 years of service will make the pensions better and fairer for current and future employees. It shows that progress is possible when we stand together.”
Mulgrew said he would keep advocating for “the next phase of pension reform” in future legislative sessions. The UFT supports a retirement age of 55.
When the original Tier 6 reforms were put in place, the retirement age of public workers hired after April 2012 was pushed from 55 to 62 to earn a full pension. The cost-cutting measures also raised the employee contribution and slimmed down benefits for recent hires.
The lowered retirement age only applies to teachers and teaching assistants, not other government workers in different retirement systems.
Non-teachers are expected to benefit from reduced contribution rates across most salary bands, ranging from 3% to 5.75%. Lawmakers also increased a cap on overtime used to calculate a worker’s final average salary, from approximately $22,000 to $30,000.
The final plan is a scaled-back version of a proposal put forward by labor unions earlier this year, totaling $1.5 billion annually.
In reaching a compromise, Hochul, who is up for re-election this fall, was able to appease her union allies, while tempering criticism from fiscal conservatives.
“First of all, we have to make sure that we have the workforce that provides the services for the rest of New Yorkers, and some of these jobs are hard to attract people to. We have a shortage of all kinds of healthcare workers, shortages of teachers, shortage of corrections officers,” Hochul said recently.
“And so, I cannot fail in delivering the services that New Yorkers expect when I can create some modest incentives to help them come to the workforce in the first place and want to become public servants. We’re having a real shortage here, so I have to address that.”
Still, not everyone was pleased with the final deal.
“Enhancing Tier 6 benefits was unnecessary and unwise,” said Andrew Rein, president of the Citizens Budget Commission. “It will require local governments and school districts to either siphon money from programs or increase taxes.”
Rein estimated the $550 million price tag, added to the costs of recent reforms in 2022 and 2024, brings the plan’s total price tag closer to $1 billion each year statewide.
New York City is expected to pay $123.3 million of the first-year cost, with other employers in the NYC Retirement System covering another $27.8 million, according to a CBC analysis of state budget documents.
Spokespeople for Mayor Zohran Mamdani did not immediately return a request for comment.
The budget bill that includes the Tier 6 reforms—which is now almost two months late—was printed Monday over the holiday weekend.
The bill passed both chambers of the state legislature on Tuesday, and Hochul signed it into law on Wednesday.
