New York City’s teacher pension costs have nearly quadrupled over the last 15 years. If it were a state, its teacher retirement costs would be the highest in the country. Once you include the contributions employees make to the pension plan, plus Social Security taxes, New York City is paying higher retirement rates than Chicago, which is itself an outlier. In percentage terms, the New York City and its employees are contributing more than 50 percent of salary toward retirement benefits.
And yet, as I note in a new report out this week, New York keeps cutting the benefits teachers actually receive.* Compared to prior generations, members hired after 2012 pay higher contribution rates than their predecessors did (aka they will earn less in take-home pay), they’ll have to serve longer to qualify for any retirement benefit at all, and they’ll receive lower pension benefits when they retire.
Due to the most recent round of cuts, I found that New York City’s latest benefit tier (Tier 6) would provide adequate retirement benefits only to teachers who serve for at least 23 consecutive years in the city’s public schools. Needless to say, most New York City teachers do not remain that long.
In an op-ed for the New York Daily News, I write:
Continuing to cut benefits for generation after generation of teachers is an unsustainable path. Instead, New York City leaders should look toward alternative models to keep costs in check while ensuring that all teachers are on a path to a secure retirement, no matter how long they serve.
*Note: While the plans are technically distinct and the funds are kept separate, the benefit rules I’m describing are essentially the same for New York City teachers as they are for teachers across the entire New York state.
–Guest post by Chad Aldeman