The Governor is building upon his pension reform proposal from last year that did not move through the State Legislature. It estimates $79 billion in savings for local government over the next 30 years. This proposal is being modified, but in general it includes the creation of a Tier 6 for new hires that:

• Requires an employee contribution of 6 percent of pay for a defined pension benefit for all years of service.  This will include different contribution rates based on salary with lowest income employees contributing 4 percent (under $32,000); 5 percent for salaries between $32,000 and $63,000; and 6 percent for salaries above $63,000;
• Includes a voluntary defined contribution (401-k style) option for new hires that would set the employer-based contribution at 4 percent and could rise to 7 percent if an employee also contributions up to 3 percent (essentially a dollar for dollar match for employers up to 3 percent above the base contribution).  The voluntary option also provides one year vesting;
• Sets the service retirement benefit to 1.667 percent of final average salary for the first 30 years of service, plus 1.5 percent for each year after 30 years.
• Extends to 65, the age full pension benefits retirement age (today this limit is set at 62 for Tier 5, and 55 years of age with 30 years of service for Tier 3 and 4);
• Eliminates service credit for unused sick time;
• Requires 12 years of service to vest (currently 10 years for Tier 5, and 5 years for Tiers 3 and 4); and
• Discounts any reportable salary over the Governor’s annual salary (currently $179,000) for purposes of calculating a pension.