New York teacher pension plan has ‘crippling’ cost to taxpayers
New York teachers and pension funds may have to pay $1.5 billion to settle lawsuits over claims they were misled about the benefits of their pension plans.
Lawyers for teachers and other public sector workers, who have been suing the city and state over the pension crisis, had argued that they had not been informed about the costs and benefits of the plans, and had not received sufficient warnings about the risk of fraud.
The pension reform bill passed the Assembly by a vote of 36 to 8, with a minority of Republicans voting against it, but the bill faces an uncertain fate in the Senate, where it is not expected to make it out of committee.
The bill, which passed the state Senate last week, has received the backing of Governor Andrew Cuomo, who has called for a full investigation into the problems.
The settlement agreement will pay out $1 billion over 20 years to the city of New York, the state Department of Labor, the New York City Teachers’ Retirement System, the California Teachers’ Pension Fund and New York State’s Department of Human Services, according to a statement released by the state Attorney General’s Office.
In addition, $1 million will be paid to the City of New Orleans, and $1,000 will be given to the New Orleans Public Library.
Lawmakers in New York and California also approved a new law that will require state and local governments to offer a public pension plan, called a “pension guarantee” for employees who are not eligible for public pension benefits.
Under the law, public employee pension plans will have to provide the same level of coverage for employees as private pensions, and it will be up to local governments, cities and towns to determine how much they need to pay for this coverage.
This is the second time in a month that New York state and California have enacted bills designed to help state and city workers who are being forced to retire from the public sector.
In June, the legislature passed a $1 trillion state and county-level budget that will fund state and federal government agencies through 2036.