What's happening
This bill increases the wage thresholds for retirement contribution rates by 3% annually for Tier 6 public employees starting April 2021.
Why it matters
Gradually adjusts contribution brackets for inflation. By increasing the wage thresholds by 3% annually, this bill ensures that public employees do not move into higher contribution rates simply due to cost-of-living wage increases, helping protect take-home pay over time.
Reduces the impact of "bracket creep" on lower- and middle-income workers. Without these adjustments, employees receiving routine raises could face higher retirement contribution rates even if their real (inflation-adjusted) earnings haven’t increased, leading to disproportionate deductions from paychecks.
Creates long-term cost implications for government employers. The change shifts a portion of future retirement funding responsibility from workers to public employers, resulting in significant projected increases in pension system costs for both the state and participating municipalities.
May improve recruitment and retention. Making contribution rates fairer for Tier 6 employees could make public sector jobs more attractive, counteracting some of the recruitment and retention challenges caused by higher employee contributions implemented in 2012.
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Headline styles
Raise Pension Contribution Thresholds
Plain English, a few words. Used as the page title.
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History
- Print number 5842a
- Amend and recommit to civil service and pensions
- Referred to civil service and pensions
- Referred to civil service and pensions
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Raise Pension Wage Brackets
In Assembly Committee · Governmental Employees · Sponsor Peter Abbate
Full text
6 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5842--A
2019-2020 Regular Sessions
IN SENATE
May 15, 2019
Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions -- recommitted to the Committee on Civil Service and Pensions in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee
AN ACT to amend the retirement and social security law and the education law, in relation to member contribution per centum increases
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Paragraphs 1, 2, 3, 4 and 5 of subdivision a of section 517 of the retirement and social security law, as added by chapter 18 of the laws of 2012, are amended to read as follows:
1. members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
2. members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages. On April one, two thousand twentyone, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
3. members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages. On April one, two thousand twentyone, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
4. members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages. On April one, two thousand
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11081-04-0
S. 5842--A 2
twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum; and
5. members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum.
§ 2. Subparagraphs (i), (ii), (iii), (iv) and (v) of paragraph 1 of subdivision a, subparagraphs (i), (ii), (iii), (iv) and (v) of paragraph 2 of subdivision a, paragraphs 1, 2, 3, 4 and 5 of subdivision f and paragraphs 1, 2, 3, 4 and 5 of subdivision g of section 613 of the retirement and social security law, subparagraphs (i), (ii), (iii), (iv) and (v) of paragraph 1 and subparagraphs (i), (ii), (iii), (iv) and (v) of paragraph 2 of subdivision a as amended by chapter 510 of the laws of 2015 and paragraphs 1, 2, 3, 4 and 5 of subdivision f and paragraphs 1, 2, 3, 4 and 5 of subdivision g as added by chapter 18 of the laws of 2012, are amended to read as follows:
(i) members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
(ii) members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
(iii) members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
(iv) members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum; and
(v) members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum.
(i) members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
(ii) members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
(iii) members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
(iv) members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages. On April one, two thou-
S. 5842--A 3
sand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum; and
(v) members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum.
1. members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
2. members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages. On April one, two thousand twentyone, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
3. members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages. On April one, two thousand twentyone, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
4. members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum; and
5. members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum.
1. members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages. On July one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
2. members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages. On July one, two thousand twentyone, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
3. members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages. On July one, two thousand twentyone, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
4. members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages. On July one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum; and
5. members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages. On July one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum.
§ 3. Subdivisions a, b, c, d and e of section 1204 of the retirement and social security law, as added by chapter 18 of the laws of 2012, are amended to read as follows:
S. 5842--A 4
a. members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subdivision shall be increased by three per centum;
b. members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages. On April one, two thousand twentyone, and every year thereafter, the wages in this subdivision shall be increased by three per centum;
c. members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages. On April one, two thousand twentyone, and every year thereafter, the wages in this subdivision shall be increased by three per centum;
d. members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subdivision shall be increased by three per centum; and
e. members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this subdivision shall be increased by three per centum.
§ 4. Paragraphs (a), (b), (c), (d) and (e) of subdivision 2 of section 182 of the education law, as added by chapter 18 of the laws of 2012, are amended to read as follows:
(a) members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this paragraph shall be increased by three per centum;
(b) members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages. On April one, two thousand twentyone, and every year thereafter, the wages in this paragraph shall be increased by three per centum;
(c) members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages. On April one, two thousand twentyone, and every year thereafter, the wages in this paragraph shall be increased by three per centum;
(d) members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this paragraph shall be increased by three per centum; and
(e) members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages. On April one, two thousand twenty-one, and every year thereafter, the wages in this paragraph shall be increased by three per centum.
§ 5. Subparagraphs (i), (ii), (iii), (iv) and (v) of paragraph (d) of subdivision 2 of section 392 of the education law, as added by chapter 18 of the laws of 2012, are amended to read as follows:
(i) members with wages of forty-five thousand dollars per annum or less shall contribute three per centum of annual wages. On July one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
S. 5842--A 5
(ii) members with wages greater than forty-five thousand per annum, but not more than fifty-five thousand per annum shall contribute three and one-half per centum of annual wages. On July one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
(iii) members with wages greater than fifty-five thousand per annum, but not more than seventy-five thousand per annum shall contribute four and one-half per centum of annual wages. On July one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum;
(iv) members with wages greater than seventy-five thousand per annum but not more than one hundred thousand per annum shall contribute five and three-quarters per centum of annual wages. On July one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum; and
(v) members with wages greater than one hundred thousand per annum shall contribute six per centum of annual wages. On July one, two thousand twenty-one, and every year thereafter, the wages in this subparagraph shall be increased by three per centum.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the retirement and social security law and the education law, in relation to member contribution per centum increases
Purpose or general idea of bill
This legislation amends the retirement and social security law to increase the wage thresholds for contributions required to be made by employees in Tier 6.
Summary of provisions
This bill amends section 517, 613, and 1204 of the Retirement and Social Security law and section 182, 392, and 6252 of the Education Law to increase the wage thresholds for contributions that are required to be made by employees in Tier 6.
Existing law
Employees that are members of the tier 6 pension plan are required to contribute a percentage of their wages based on how much they are paid annually. The current brackets are:
Less than $45,000 - 3% of wages $45,000 - $55,000 - 3.5% $55,000 - $75,000 - 4.5% $75,000-$100,000 - 5.75% 5.75% Over $100,000 - 6%
Justification
The current tier 6 contribution system requires employees to contribute a percentage of their wages to pay for their pension. While this system is intended to ensure that lower income employees contribute a smaller percentage of their income than those that make more, this will not be the case over time. For example, an employee that currently makes $40,000 per year will pay 3% of their wages for their pension.
If they receive a 2% raise annually, they would move into the 3.5% pension contribution bracket within 7 years. This effectively negates the value of the raises, as with each income bracket they move into they lose more of their money to the pension fund. Furthermore, these wage brackets set in statute do not account for inflation, meaning the value of someone's income will decrease over time but they are still required to contribute the same percent. This legislation would fix this issue by increasing each wage bracket by 3% per year to both reflect the rising value of goods and services and help public servants keep more of their own income.
Prior legislative history
New bill
Fiscal implications
See bill.
Effective date
This act shall take effect immediately.
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