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For Release — July 8, 2010

Business Council says AG's pension padding report shows need for reform

ALBANY— “Attorney General Andrew Cuomo's report on pension padding by public employees shows the critical need for pension reform in New York state,” said Kenneth Adams, president and CEO of The Business Council of New York State, Inc. “Public employee pension costs are one of the things that make New York a very expensive place to live and work.”

The Attorney General's report found two distinct patterns in state agencies, localities and authorities that they probed. First, employees boosted their overtime dramatically in their immediate pre-retirement years or suddenly started working long hours although they had never done so before. The effect is to inflate their pension benefits.

New York has the highest public employee pension cost of any state in the nation at $486 per resident in 2007, according to the U.S. Census Bureau. These pension costs are one reason that New York has some of the highest property taxes in the nation as local governments and school districts struggle to pay these costs.

“The only way to make public employee pension costs manageable going forward is to create a new defined contribution system, like a 401K, for new employees,” said Adams. “The costs of the current defined benefit system are unsustainable, even without the abuse unveiled by the Attorney General."

The defined benefit system of current employees is protected by the state Constitution. A defined contribution plan would only apply to new hires.

“In addition to a new plan for new hires, controls must be put in place to prevent the kinds of overtime abuse and pension padding discovered by the Attorney General,” concluded Adams.

The full report is available here.


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