NYS Comptroller Tom DiNapoli Proposal Will Catch Pension Abusers

New York State Comptroller Thomas P. DiNapoli proposed legislation today to greatly enhance his ability to catch those who abuse the pension system. The bill would grant the Comptroller access to New York State Department of Taxation and Finance’s wage reporting system to identify New York State and Local Retirement System retirees working for local governments who exceed post-retirement earnings limitations. If a state or local government employee earns more than those limits, the Comptroller has the authority to suspend and recoup any excess pension payments.

“This legislation sends a message to anyone who tries to game the retirement system: if you don’t play by the rules, we will find you and make you pay,” said DiNapoli. “Government agencies should be enabled to work together to reduce waste, fraud and abuse. This legislation will do just that. We have half the puzzle and Tax and Finance has the other half. Together, we’ll solve this problem and stop this kind of abuse.”

Currently, the Retirement and Social Security Law (RSSL) places limits on the amount that may be earned by a retiree who returns to public employment without it affecting his or her pension payments. Most retirees are covered by Section 212 of the RSSL, which allows retirees under age 65 to earn up to $30,000 per calendar year without any pension penalty.

The Retirement System annually compares information for state employees with the State Comptroller’s Office Division of Payroll to identify retirees who have obtained employment with the state. In addition, a law passed in 2008 requires school districts and BOCES to annually report all public retirees, including independent contractors and consultants, on their payrolls during the previous calendar year. If retirees are found to have exceeded the wage earnings limitations, the Retirement System suspends and recoups excess pension payments.

However, there currently isn’t a mechanism for a similar comparison for retirees employed by the thousands of local public employers in the state. DiNapoli’s legislation would amend Section 171-a of the Tax Law to grant the Comptroller’s Office access to Tax and Finance’s wage reporting system to match the Retirement System’s records with information reported by local governments to Tax and Finance. This match would allow the Comptroller’s Office to identify retirees improperly collecting a state pension and a local government salary.

In February, Comptroller DiNapoli and Oneida County District Attorney Scott McNamara announced that former Rome police officer Thomas C. Hubal had been convicted of third-degree larceny for earning more than his pension legal limit over a nine-year period. Hubal must repay more than $88,000 and serve six-months incarceration for defrauding the system. If this legislation had been in effect, Mr. Hubal would have been caught in the first year that his salary exceeded his pension limitation.

Under current law, it is the responsibility of retirees to report any post-retirement income to the Retirement System. Each year, all retirees are mailed a Report of Post-Retirement Employment Form, which must be filled out and returned to the State Comptroller’s Office if the retiree received any earnings from public employment.

NYC Gov't Workers Paid Less Than Private Sector Peers, Study Finds

First Report by Retirement Security NYC Offers Comprehensive Analysis
of Firefighter, Police Officer, Teacher, and Other Municipal Employee Pay

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Retirement Security NYC, the initiative by New York City Comptroller John C. Liu to provide research on public employee pension issues, today released its first study, entitled “Municipal Employee Compensation in New York City.”

Authored by the Comptroller’s Chief Economist Frank Braconi, Ph.D., the report found that New York City municipal employees are paid 17% less on average than their NYC private sector, for-profit counterparts. 

This is before adjustments for education and size of employer.

In addition, the study demonstrated that there is a narrower range between the top and bottom of the pay scales for municipal workers than for employees at private companies. “This ‘wage compression’ among City workers means there is less of an income gap in the public sector,” said Braconi. “These local findings reflect similar studies of public versus private sector wage patterns both across the states and nationally.”

“These findings about municipal salaries are an important foundation for any discussion about public employee pensions,” said Comptroller Liu. “The issue of retirement needs to be looked at in the context of the overall compensation package earned by public employees.

The study also found that:

• New York City employees are better educated, on average, than their private sector peers. Forty-nine percent of City workers have a bachelor’s degree or higher, compared to 41% of those employed in New York’s private for-profit sector.
• Large private, for-profit employers (those with more than 1,000 employees) pay wages that are 13% higher on average than small and midsize private employers.
• The City’s retirement cost contribution for most civilian workers is roughly equivalent to a large corporate employer’s cost of contributing to a defined contribution (a.k.a traditional pension) plan, if return-on-investment targets are met.

“This kind of objective research will serve both public employees and the taxpayers,” Comptroller Liu added. “Policy decisions of this magnitude must be made thoughtfully and based on the facts.”

Download the full report here.

Download the Report Summary here.

About Retirement Security NYC

Retirement Security NYC is a major initiative launched by Comptroller John C. Liu to protect the retirement security of public employees while ensuring the City’s financial health. Retirement Security NYC has partnered with two leading institutions—the National Institute on Retirement Security (NIRS) and The New School’s Schwartz Center for Economic Policy Analysis (SCEPA)—to analyze the current state of public pensions and offer sensible reforms.