Tier VI’s impact on military families
Before lawmakers reached an agreement on the state budget, they passed the controversial Tier VI pension plan. The final agreement differed from what Governor Andrew Cuomo originally proposed, eliminating the option for unionized workers to invest in a 401K style program instead of the defined contribution plan. But other changes were also made, including at least one little noticed provision that is affecting military families. Zack Fink reports.
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NEW YORK STATE -- One of the most commonly heard objections to pension reform, at least among Democrats, is that it unfairly targets the middle class. As part of the new Tier VI plan, pension contributions are going up for public employees who are hired starting this week. Those higher rates will even be passed along to those who take leave from their jobs to serve in the military.
“If they leave government and serve in the military, during that period, if they want to buy back the time that they were away, they would have to pay an amount equivalent to six percent of salary. Whereas until now, it had only been a three percent buy back," said Richard Steier, Editor of the Chief Leader.
According to the governor's office, Tier VI raised contribution rates from three percent to a variable three to six percent, depending on salary.
In the case of those who leave jobs temporarily to serve in the military, they are permitted to buy back pension credits for time they were not technically paying into the system, albeit at a now higher rate.
Governor Cuomo continues to cite pension reform as a difficult, but necessary change.
"What we did with pension reform is going to change the financial position of this state for decades to come," Cuomo said.
Some believe the military component was simply an oversight by lawmakers and the governor. And there will likely be enough pushback against lawmakers from soldiers serving in war zones, that they'll revisit the law.
"Anything can be corrected. And there are enough complaints about the bill that my guess is they are going to revisit it before the end of the legislative session in June."
Lawmakers aren't due back here for two weeks. And some of the pressing business includes whether to raise the minimum wage. It's unclear where fixes to the pension law fall on that priority list. If it’s on it at all.