CBC examines the retirement benefits – health insurance and pension payments – for employees of the City and State of New York. The report finds that:

1. Retirement benefits are a large and rapidly growing expense for the City and the State;
2. Benefits provided by the City and State are more generous than those provided by large private employers, the federal government and most other states and localities; and
3. Generous pension benefits for City and State workers can no longer be justified on the ground that these workers’ wages are lower than in the private sector, because for most occupations (managers and professionals are the notable exceptions) wages in the public sector are higher than in the private sector.

The City and State can save substantial amounts for taxpayers and still secure a qualified and competitive labor force by redesigning its retirement benefits. Both health insurance and pension benefits should be revamped.

Changes to the defined benefit system should be guided by the comparative analysis presented in this report. The alterations in benefits should be designed to make New York’s systems resemble more closely those of other large public and private employers. Five steps should be given priority.

1. Increase required employee contributions.
2. Raise the minimum age requirement for retirement.
3. Base pension benefits on the more standard definition of final average salary.
4. Define work-related disabilities more rigorously.
5. Eliminate the variable supplements available to some retired New York City uniformed workers.