Mike Bloomberg's pension pitch

New York City's mayor, who has watched tax-funded municipal pension contributions increase by about 650 percent in the last decade, yesterday proposed a series of pension changes for city workers.

Stop us if you've heard this one: the mayor's proposal would raise retirement ages, increase employee contributions, eliminate overtime in pension calculations and tweak the "final average salary" formula for future hires only. Bloomberg also is seeking to immediately eliminate an annual $12,000 pension supplement for retired cops and firefighters--the so-called "Christmas Bonus"--because this benefit is not constitutionally protected.  This is the one actual giveback in the proposal, since it would represent an immediate $200 million annual savings (out of a pension bill projected at $8.4 billion for fiscal 2012). 

Crucially, however, Bloomberg would preserve the traditional defined-benefit pension system--without even offering a defined-contribution plan (such as the one already chosen by thousands of City University professors) as an option for city employees.  Ironically, his own former schools chancellor recently pointed out that a DC plan would be optimal for teachers, in particular.

Predictably, municipal unions portrayed this as a huge assault on their members, and the New York Times headlined the mayor's proposals as a "sweeping overhaul."  In fact, given the fiscal crisis and heightened public concern about and awareness of pension costs, it's a missed opportunity to seek much more fundamental change. 

The mayor's pension changes all would require state legislative approval, although he is also seeking to lift a statutory prohibition on collective bargaining of pension benefits. (I don't think this is a good idea, for reasons explained here and here.)