BILL NUMBER: S3614E
SPONSOR: GOUNARDES
 
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 and
education 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 sections 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. Such thresholds would immediately increase
by $5,000 and would thereafter increase by the rate of annual inflation,
not to exceed 3%.
 
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 - 1
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 seven 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 an employee'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 $5,000 immediately, and then
tying it to the rate of inflation, to both reflect the rising value of
goods and services and help public servants keep more of their own
income.
 
PRIOR LEGISLATIVE HISTORY:
2023: S3614B - Died in Civil Service and Pensions
2022: S4236 - Died in Civil Service and Pensions
2021: S4236 - Died in Civil Service and Pensions
2020: S5842A - Died in Civil Service and Pensions
2019: S5842 - Died in Civil Service and Pensions
 
FISCAL IMPLICATIONS:
See bill.
 
EFFECTIVE DATE:
This act shall take effect immediately.