Cuomo Pension Plan Sparks Fight With New York Unions

New York Gov. Andrew Cuomo's effort to change the pension system for state public employees has sparked a labor union backlash against the first-term Democrat.

Cuomo's "Tier 6" pension plan would reduce benefits for new public employees and give them the option of enrolling in something closer to a 401(k) savings plan -- measures strongly opposed by labor unions. On the heels of union-funded advertisements against the proposal, the AFL-CIO union federation issued a resolution to its affiliates Wednesday "strongly condemning" the Cuomo proposal and urging workers to protest.

"We strongly condemn the Tier 6 plan as it would cut pension benefits for new hires by 40 percent and pull billions of dollars out of the state and city pension systems to turn over to Wall Street financial firms," the AFL-CIO resolution reads. "Tier 6 is simply unfair to public workers who have already made significant sacrifices."

The governor's office could not immediately be reached for comment.

Cuomo has moved pension reform to the top of his political agenda in recent days, declaring Tuesday that "it would be irresponsible of me as governor to accept a budget for this state that doesn’t have pension reform." State lawmakers must present the governor with a budget by the end of the month.

Cuomo and other reform advocates say New York's pension costs give the state no choice but to overhaul retirement plans for government workers. New York Mayor Michael Bloomberg delivered a speech Tuesday on Long Island arguing that local governments can't sustain pension costs, and the mayor's reform group has bought ads to promote the Cuomo measure.

"We want legislators to know that every extra dollar we have to put toward pensions is a dollar we can’t invest in schools, public safety, job creation, roads and bridges and other critical infrastructure," Bloomberg said.

But the state's public-sector unions, which have been protesting in Albany and elsewhere, say that the pension system is stable. Although pension costs for employers have risen since the financial crisis, those costs will soon come down, argued Brian McDonnell, New York legislative director for the American Federation of State, County and Municipal Employees, one of the unions strongly opposing the Cuomo proposal.

The Tier 6 plan, McDonnell said, will leave new state employees without enough to live in retirement. And encouraging employees to invest in an individual savings plan like a 401(k), may end up undermining and destabilizing the more traditional pension plan, he said.

"We will agree that local governments are struggling," McDonnell said. "They're definitely being squeezed. But this is the wrong solution. ... It's a real assault on retirement security. This is the best-funded, best-run pension system in the public sector."

AN AFSCME radio ad attacking the Cuomo plan: