Tier 1 Pensions Put Stress On City Budget

posted by Blain Ensley - 

NYC taxpayers cough up over 10 billion dollars a year in pension payments to take care of the 135,000 folks in The New York City Retirement System. Most pension plans are great; you serve your time at work and retire with a nice income. 

It's the huge Tier 1 pension plans that have the city paying out exorbitant amounts of money. For example, let's take Eugene Egan.  Mr. Egan worked as an executive for the sanitation department for over 60 years. When he retired in 2015 his salary was $128,189 per year. Most sanitation workers receive a pension of around $49,000 a year, but Mr. Egan being a former executive should get a bit more right? How does 285, grand a year sound?

The reason Mr. Egan and 853 other pension recipients knock down so much money a year is because they started working for the city before 1973 when Tier 1 pensions were available. Tier 1 pensions allowed city workers to continually pay extra into their retirement plans throughout their entire careers.

The City Budget Commission Vice President Maria Doulis stated "It's great for retirees. A little bitter for taxpayers , the Tier 1 pension plan is obsolete and the city should move toward contribution based plans like the 401k".

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Photo Credit: Getty Images

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