The Cost of Early Retirement

A proposal to allow certain public employees in New York City to retire early would cost $68.1 million in the first year, according to a report released by the city’s Independent Budget Office last week.

The IBO estimate is greater than one used by the state Legislature, which is considering the proposal, and far below that of Mayor Michael Bloomberg’s administration.

The mayor’s office estimated that the early retirement — which would allow employees to keep full pension benefits if they retire at age 55 rather 62 — would cost the city $200 million. The Legislature is seeking a new cost estimate after it was revealed that their estimate was done by an actuary employed by unions that would benefit from the bill.

The increase in pension and health care benefits would total $95.9 million in the first year, according to the report. The hiring of entry-level employees to fill newly vacated positions would save $27.8 million, resulting in a net cost of $68.1 million in the first year, it said.

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