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NYS RETIREMENT INCENTIVE UPDATE
6/2/2010
- Cheryl A. Felice, President
An Important Message for AME Members:
June 2, 2010
NYS RETIREMENT INCENTIVE UPDATE:
On behalf of your AME Executive Board here are some considerations on the latest facts surrounding New York State’s implementation of a Voluntary Severance Program designed to achieve recurring savings to the state’s financial plan.
AME’s Political Lobbyist Pete Meringolo reports that Governor Paterson announced the New York State Legislature has passed his Bill authorizing an Early Retirement Incentive providing state agency commissioners and local officials with an additional mechanism to achieve necessary workforce cost savings. This state legislation represents an important first step; however, the Governor states that additional workforce reductions are essential to address New York State’s current $9.2 billion deficit. Governor Paterson has pledged to sign it into law.
AME members must keep in mind that even with the Governor’s signature on the retirement bill, we would need a local law to opt-in. That can be the majority of the Suffolk County Legislature with County Executive Levy signing the law, or at least 2/3 of the Legislature if Levy vetoes. That has been the normal process for Early Retirement Plans.
As with all legislation, there are important provisions that represent an immediate impact upon AME members, some of which include:
• Part A provides a targeted incentive to positions that can be eliminated; however, County positions do not have to be abolished if the salary savings over 2 years is at least 50%.
• Part A provides an additional month of retirement service credit for each year of credited service – up to a maximum of 3 years of additional retirement service credit.
• Local employers who choose to opt-in to Part A must do so on or before August 31, 2010. However, the “open period” to be selected by the municipality in such local law can be between 30 and 90 days, not to go beyond December 31, 2010. The key date is enactment by August 31, 2010; and the window for retiring will not be known unless and until the local legislation is enacted.
• Eligible employees must be currently eligible to retire, or be at least 50 years of age with ten or more years of service. Penalties for retiring before reaching 30 years of service still apply under Part A.
• Part B provides the option to retire without penalty to Executive Branch and participating local government employees at age 55 with at least 25 years of service.
• Payment of “severance” is subject to all usual and customary taxes and withholdings.
• The federal revenue provision (applying to employees in positions which are federally-funded) appears to apply only to state employees (see Part A, Section 8).
• Employees meeting the required criteria may be denied participation in this part of the early retirement incentive if it is determined that an employee holds a position that is critical to the maintenance of public health and safety.
• In the event that the level of interest exceeds the amount of severances that can be offered, the selection will be made on the basis of seniority within job titles.
As your AME representatives, we will continue to monitor this important issue and report back to you immediately upon hearing updates. In the interim, however, it is equally important for our AME members to fully understand the participation limitations, and the basic ground rules, of this Bill.
We will continue to keep you informed.
Unity wins,
Cheryl A. Felice
President