In Final Hours, M.T.A. Took a Big Risk on PensionsOK, time value of money calculated in, let's allow for 30 years of service before a worker draws on his pension at age 55. At even 6% a year earnings, that $20 million would grow to the grand total of $100 million.
By STEVEN GREENHOUSE
Published: December 21, 2005
On the final day of intense negotiations, the Metropolitan Transportation Authority, it turns out, greatly altered what it had called its final offer, to address many of the objections of the transit workers' union. The authority improved its earlier wage proposals, dropped its demand for concessions on health benefits and stopped calling for an increase in the retirement age, to 62 from 55.
But then, just hours before the strike deadline, the authority's chairman, Peter S. Kalikow, put forward a surprise demand that stunned the union. Seeking to rein in the authority's soaring pension costs, he asked that all new transit workers contribute 6 percent of their wages toward their pensions, up from the 2 percent that current workers pay. The union balked, and then shut down the nation's largest transit system for the first time in a quarter-century.
Yet for all the rage and bluster that followed, this war was declared over a pension proposal that would have saved the transit authority less than $20 million over the next three years.
It seemed a small figure, considering that the city says that every day of the strike will cost its businesses hundreds of millions of dollars in lost revenues. But the authority contends that it must act now to prevent a "tidal wave" of pension outlays if costs are not brought under control.
The MTA (George Pataki and Michael Bloomberg) has an unfunded pension liability (meaning money they've borrowed from their workers' future to fund current operations) of $450 million. This, with a $1 Billion dollar operating surplus.
Why not just fund that extra $20 million now out of the surplus, instead of giving commuters an almost useless nine extra days of discounted fares on the rails and buses?