Wednesday, May 23, 2007

Interview Aired on WCBS All News Radio 880 in NYC

Ginny Kosola: Experts Explain the Pension Issue
NY State Law Requires New Tiers for any Changes

Dec 19, 2005 1:49 pm US/Eastern
NEW YORK (WCBS) A two-tier pension system like the one being sought by the MTA in talks with the TWU is not unusual, says human resources expert Mitchell Langbert, an associate business professor at Brooklyn college.

The pension proposal, perceived as the main sticking-point in the talks between the union and MTA is actually not legally negotiable, says Edmund McMahon, director of The Manhattan Institute think tank.

Langbert says multiple-tiered pension plans have existed in New York state for many years, "I myself as a professor at Brooklyn college, part of the City University of New York, am part of a multi-tiered pension plan." Langbert says his benefits are not as generous as those of colleagues who have worked for the city longer.

The reason there are multi-tiered systems, and the MTA is seeking the two-tiered plan, is New York State's constitutional prohibition on reducing accrued benefits for existing workers. For the government to save money, it can only offer different benefits for new hires.

"What's unusual about this is that, in fact, pension benefits are not dictated by labor contracts in New York City and New York State government. Penison benefits are actually set by state law," says McMahon.

The state constitution absolutely guarantees that there can't be any reduction in a pension benefit for an employee who is on the payroll, says McMahon. The union is actually correct in making its argument to the Public Employment Relations Board (PERB) that pensions actually are not a bargaining issue. PERB, he explains, acts as a mediating panel between the government and unions.

"Although the Taylor Law clearly outlaws negotiations, formally, around the issue of pension benefits, unions have been happy in the past to negotiate side benefits and side deals for changes in the laws to increase their pensions." But, McMahon explains, those side agreements must then be approved by the state legislature and signed by the governor.

As for where he stands on the pension issue for new MTA hires, McMahon believes the best solution would be to pay the workers more now, and give them a "defined contribution pension," such as a 401-K. "Very few of the people who ride subways and buses and pay the taxes to subsidize them can dream of retiring at age 55 with a full pension," he notes.

Ginny Kosola

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