In the last Constitutional Convention, in 1938, the phase “…public employee pensions may not be diminished or impaired,” was added to the State Constitution.
Changing the constitution requires votes in both houses of the state legislatures in two consecutive sessions followed by a statewide referendum of voters. In other words our pensions are secured by the specific wording in the NYS Constitution.
Our pensions are “defined benefit” pensions, the amount of the pension defined by formula, in our case by age, years of service and average salary in final years.
For NYC TRS Tier IV members, the pension is calculated using the Final Average Salary (FAS), which is typically the average of the highest three consecutive annual salaries (often called “high-3”) earned during service. A 10% cap applies to salary increases when calculating the FAS.
Key Details Regarding Highest Salary Calculation:
- Definition of FAS: The average of your three highest consecutive years of salary, commonly used for the final three years, but can be any three consecutive years.
- 10% Limitation: If a salary in any year used for the FAS exceeds the average of the previous two years by more than 10%, the amount over 10% is excluded.
- Included Compensation: Base salary, longevity payments, and “per session” (summer school/coaching) pay often count toward this calculation.
- Excluded Pay: Generally, any salary increase over 10% in a single year within the calculation period, as per the Summary Plan Description Tier III/Tier IV.
Members can use the TRS-NYC website to get an estimate of their retirement allowance, Service Retirement Plans and Benefits for Tier III/IV. and the UFT Pension clinics and consultation service. The pensions are actually managed and paid by the Office of the Comptroller.
Investments for NYC public employee pensions are primarily determined by the New York City Comptroller’s Bureau of Asset Management in conjunction with the Boards of Trustees for each of the five major pension systems. The Comptroller acts as investment advisor and custodian for the $200B+ funds, implementing board-approved asset allocations.
Key entities involved in determining investments include:
- NYC Comptroller: Acts as fiduciary and advisor, managing the investment portfolio and overseeing the Bureau of Asset Management.
- Boards of Trustees: Each of the five systems (Teachers, Employees, Police, Fire, Board of Education) has its own board that makes final decisions on asset allocation.
- Bureau of Asset Management (BAM): A division within the Comptroller’s office that implements investment decisions, reports on performance, and handles daily portfolio management.
- External Asset Managers: While the Comptroller and Boards make policy decisions, external managers are hired to manage specific portfolios, including private equity, real estate, and public equities
The Comptroller just announced that with the approval of the Trustees the Comptroller will invest $4 B in the a number of programs to increase affordable housing across the city, see details of the announcement here.
The commitment must be at the same rate of return as all other investments, “Commitment will double pension funds’ housing investments while ensuring strong risk-adjusted returns for pensioners I suggested to the Trustees that a set aside for teachers be included in the plan.
In order to address the city’s budget deficit, by law the city budget must be balanced, the City Council must vote to approve the budget, usually mid June, Mamdani floated a plan to delay funding the public employee pension funding. The city contributes about 10% of the budget ($11B) each year, It would have no impact on pensions.
“As of late April 2026, New York City Mayor Zohran Mamdani is considering delaying city payments into municipal pension funds to address a $5.4 billion to $7.1 billion budget deficit, not to delay payments to retirees. The proposal aims to amortize or re-amortize pension liabilities, potentially extending the full funding deadline from 2032 to 2042 or later to save roughly $1 billion annually.”
Key Details of the Proposal:
- Targeted Action: The proposal focuses on lowering short-term employer contributions to the pension funds, rather than reducing benefits for retirees which are guaranteed by the State Constitution
- Goal: To mitigate a massive budget gap without implementing severe service cuts or immediate large-scale tax increases.
- Criticism: Critics, including the Citizens Budget Commission and editorial boards, argue that this is a “penny wise and pound foolish” approach that resembles fiscal tactics from the 1970s, which could saddle future taxpayers with higher long-term costs.
- Risks: Opponents highlight that deferring these payments acts as a “payday loan” that increases the total, long-term costs of the city’s pension debt.
Another possibility is to delay the full implementation of the Class Size Reduction law, the delay would require the approval of the UFT, and could be a trade off …. Fix Tier 6 is awaiting the State budget approval and the para pay boost requires the approval of the City Council and the Mayor, The budget is a month late and each week the legislature passes a “continuing resolution” to keep the State solvent. If the State budget is resolved without additional funding for the City, a last resort might be staff reductions, layoffs, unlikely, however, the 1975 layoffs were announced only days before the opening of school .
Shelly Silver, who was the Speaker of the Assembly sued Governor Pataki over the issue of whether the governor could add non-budgetary items to the budget, the State’s highest court denied the suit See decision here.
The leaders of both houses have been mumbling about attempting to change the State Constitution, a direct challenge to the Governor who is being challenged by an aggressive MAGA Republican, cracks within the Democratic Party in a very significant year may place pressure on the Governor to back off a few of the issues holding up the budget.
Until the State budget is approved the City budget, reliant on a range of unresolved budget issues, cannot move forward.
BTW, on May13th, in school you have an opportunity to protect pensions by voting for Tom Brown, currently the chair of the TRS-NYC Board.
Politics is a full contact sport, as someone said, “if you want a friend in the political arena, buy a puppy.”
Ed in the Apple: Blogging on the Intersection of Education and Politics Title 