{"id":99,"date":"2026-05-28T22:15:21","date_gmt":"2026-05-28T22:15:21","guid":{"rendered":"https:\/\/businessrelocationdigest.com\/?p=99"},"modified":"2026-05-28T22:15:21","modified_gmt":"2026-05-28T22:15:21","slug":"significant-progress-made-with-tier-6-reforms-in-state-budget","status":"publish","type":"post","link":"https:\/\/businessrelocationdigest.com\/?p=99","title":{"rendered":"\u201cSignificant progress\u201d made with Tier 6 reforms in state budget"},"content":{"rendered":"
\n

State, local and other public sector workers walked away from this year\u2019s state budget with some significant wins after Gov. Kathy Hochul and lawmakers agreed to a number of changes to the controversial Tier 6 public pension plan. Tier 6 offered public sector union workers hired on or after April 1, 2012, far worse benefits compared to older, more generous pension tiers. It included higher rates of contributions from one\u2019s salary and an older retirement age, pitched as a cost-saving measure by former Gov. Andrew Cuomo after previous tiers hit state and local government coffers hard.<\/p>\n

Read more For Kathy Hochul, a late budget isn\u2019t a problem \u2013 it\u2019s a successful tactic<\/a><\/p>\n

Labor unions have pushed for changes to Tier 6 since it was enacted, but this year marks the most success in the endeavour following smaller previous tweaks. Teachers specifically won a five-year reduction in retirement age, permitting educators across the state to retire at age 58 without penalty after 30 years instead of the current 63. Teachers will also benefit from reductions in individual contributions to the pension fund that will impact all state, local and public sector union workers in New York.\u00a0<\/p>\n

United Federation of Teachers President Michael Mulgrew has been on the front lines of Tier 6 reform for years, and he helped get the changes included in the very late state budget. City & State caught up with him about the hard-won victories for his members, and his take on concerns over a hefty estimated price tag for state and local governments.<\/p>\n

The conversation took place after widespread reporting on the details of the agreed deal, which were proven accurate, but before the relevant budget bill was printed. This interview has been edited for length and clarity.<\/em><\/p>\n

How do you feel about where things landed? It\u2019s not 100% of what you and others were asking for, but it is a pretty solid chunk of it.<\/strong><\/p>\n

Yeah, it\u2019s significant progress, which we\u2019re happy with. We knew we weren\u2019t going to get everything in this done that we are all committed to getting done, but it\u2019s significant progress, so we\u2019re happy for that. Different unions have different priorities, but in the end we all have the same exact thing, which is to undo all of the nastiness of Tier 6.<\/p>\n

Teachers were able to lower the retirement age from 63 to 58. How do you think that will improve recruitment and retention?<\/strong><\/p>\n

It definitely is going to help, because, for us \u2013 our unions \u2013 the overwhelming majority of our members start under the age of 25. Most of them start 21, 22, right out of college. So this was something that was a complete focus for us, was the age. Because our members, by and large, we\u2019re going to have to work 41 or 42 years, which was having a major impact on both recruitment and retention. And it\u2019s a big deal, five years, to our folks. It\u2019s a very big deal, especially in Tier 6. Because in Tier 6, every year you work, even if you have 30 years, you\u2019re still required to pay contributions. If the teacher had to work to 63, that would require them to pay another $45,000 in contributions, which now they don\u2019t have to. And the other thing is they can retire at 58 with no penalty, where right now if they needed to retire at the age of 58, 30% of their pension would be gone.<\/p>\n

What made this year the year to get Tier 6 reform done?<\/strong><\/p>\n

The economy at the state level is quite well. A lot of the cost is incurred by individual workers and by local government. But I think it was really about everyone just saying, \u201cEnough is enough with this, we have to start making some progress.\u201d Remember, when Tier 4 came out in 1982, it was not completely fixed until 2006. It took that long to fix Tier 4. This one\u2019s much worse. I think it\u2019s because this one is so much worse. We\u2019ve never had a pension tier like this, with this amount of money going into it, with individual members contributing so much, with local governments paying so much, with people having to work so long. And none of it was necessary. If you go back to 2012, both (the New York City and state) comptrollers at that time were writing editorials saying, \u201cWe do not need to do this, this is a mistake.\u201d<\/p>\n

Read more Opinion: More Asian New Yorkers should consider joining the government workforce<\/a><\/p>\n

In terms of costs, original estimates were around $1.5 billion and the final budget plan was estimated at $577 million. Do you think those are accurate and was this a good compromise between reform and costs?<\/strong><\/p>\n

Of course, I never believe any estimated costs out of Albany, or New York City, or any government-based entity. I\u2019m sorry, I\u2019ve just been doing this for too long. You have this position known as an actuary, right? Their job is very simple. Once the tier is created, they want to make sure they get all the revenue that the tier is supposed to create for them, all the payments of local government, state government, city government. When they\u2019re estimating the costs, if you ask them, \u201cIs the money necessary?\u201d They\u2019ll just tell you: \u201cThat\u2019s irrelevant. Our job is to calculate what we\u2019re supposed to get, and it doesn\u2019t matter if we need it or not.\u201d That\u2019s the problem, because we have to look at that side of the equation right now.<\/p>\n

A lot of the pushback around these reforms was around the cost, especially with a focus on affordability. Are you saying that\u2019s not a relevant concern?<\/strong><\/p>\n

No, it is a relevant concern. Because we know, and we are very confident when we argue and say there\u2019s too much money being put into this pension tier. When you start seeing pension systems going at 105%, 108%, 110%, that means there\u2019s a lot of money being paid into those systems that should not be going into it. But when they calculate the cost, that doesn\u2019t matter to them. To the actuary, it\u2019s, \u201cWe\u2019re supposed to get all this money. Period.\u201d<\/p>\n

So you\u2019re saying the fixes being put into place will also fix some of the overpayments happening now?<\/strong><\/p>\n

Yes.<\/p>\n

And in your estimation, some of the cost concerns have been overblown?<\/strong><\/p>\n

Yes.<\/p>\n

Looking at this from a political angle of the governor\u2019s reelection, do you think that this is going to put her in a good position with the unions to really come out strong for her?<\/strong><\/p>\n

When you\u2019re an elected official and you\u2019re talking about affordability, about workers, the majority of the people who are the workers of your state, and you do something significant? Yeah, it\u2019s going to have a profound impact.<\/p>\n

Read more Empire AI is already making rapid progress in drug discovery<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

In a Q&A, United Federation of Teachers President Michael Mulgrew talks about the new, lower retirement age for educators.<\/p>\n","protected":false},"author":1,"featured_media":98,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,37,20,30],"tags":[15,40,21,31],"class_list":["post-99","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budget","category-education","category-new-york-city","category-personality","tag-budget","tag-education","tag-new-york-city","tag-personality"],"yoast_head":"\n\u201cSignificant progress\u201d made with Tier 6 reforms in state budget - Business Relocation Digest<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/businessrelocationdigest.com\/?p=99\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"\u201cSignificant progress\u201d made with Tier 6 reforms in state budget - 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