The difference in member cost for the MTA Pension: 1999 vs 2004

Bottalico and Doyle could have and should have obtained the MTA Pension during the 1999 contract negotiations with MTA Metro-North. The cost to the members was basically their Vanguard accounts, just like M-N management employees, who received pension credits back to 1983. There was no zero(s), no uncapped 3% employee salary contribution, no co-payment of health and welfare benefits (18% of the cost of the plan plus all future adjustments) for all new hires, no trading Veterans Day for the day after Thanksgiving, no loss of the $100,000 tax free life insurance policy, no giving up the choice holiday for employees with more than 30 years of service. If they had secured the pension in 1999, then there would have been absolutely no reason to accept a zero % wage increase in 2004.

Why didn't Bottalico and Doyle accept the MTA Pension in 1999? Bottalico and Doyle had distributed A-cards in December of 1998 and needed BLE Local Chairman Richard Engel's support to form the Association of Commuter Rail Employees (ACRE). Engel informed Doyle that he would not support ACRE (Engel had influence over approximately 125 votes) if Doyle surrendered the Vanguard accounts for the MTA Pension. Doyle's primary concern was forming ACRE, and therefore the Pension was not included in the 1999 contract. Subsequently, every ACRE member overpaid for the MTA Pension.

To provide a frame of reference to determine an approximate cost factor for each individual member, some examples are listed. Each members' situation is different. Factors include age, seniority, Vanguard balance, loss of Veterans Day, loss of 2 nd choice holiday, the 3% salary contribution, 18% cost of health and welfare payments plus all future adjustments, the zero % wage increase, etc. All examples that follow are using conservative numbers.

Example 1: Employee age 62 in 2004. Vanguard balance in 2004 was $90,000. His Vanguard balance in 1999 would have bee around $48,000 (6 years at $7,000 in his Vanguard account based on a $100,000 salary) interest not included. This employee retires in 2004 after contract signed. This employee overpaid $42,000 for the MTA pension plan in 2004.

Example 2: Employee hired in 1998, age 20. In 1999 had Vanguard balance of $2,000 (3% on a 60,000 salary) plus interest. His approximate Vanguard balance in 2004 would have been around $17,000 (4% of 60,000 salary for 6 years) plus interest. In 2004 at age 26 this employee has 29 years to work before he can retire. His 3% salary contribution would be around $78,300 (3% salary contribution on average salary of $90,000 for 29 years), zero % wage increase for 29 years $103,000 (see attached chart), Loss of Veterans Day for 29 years $6,000. Add up all of these factors since 1999 and this employee overpaid $202,300 for the MTA Pension.

Example 3: Employee age 45 in 1999 with 20 years seniority has Vanguard balance of $40,000. In 2004 his Vanguard balance could have been $85,000, interest not included. Difference of $45,000, will work to age 62 to avoid 12% reduction at age 60 with defined pension benefit because he does not have 30 years in the defined pension plan. 3% salary contribution for 12 years is $36,000 (3% on a $100,000 salary). Loss of 12 years salary increases by taking the zero comes to $36,000 (conservative estimate). 12 years with loss of Veterans Day $3,000. 7 years with loss of 2 nd choice holiday $3,000. Total this employee overpaid for the MTA Pension was $118,000.

Example 4: A new ACRE hire in 2005, age 25. 30 years of the zero factor is around $108,000, 30 years of 3% salary contribution $90,000 (average salary of $100,000 over his 30 year career), 30 years of paying for health and welfare benefits at 18% of the cost of the plan plus all future adjustments which is currently $2509 per year for the Empire family plan, $150,000 (using a 10% cost increase each year for 5 years, the cost of the plan in the 5 th year would be $3674). Total cost of MTA Pension for the new ACRE hire excluding the Veterans Day holiday factor would be $348,000. This is a very conservative total estimate.

Current cost towards health and welfare benefits for new ACRE hires are as follows:

Empire Plan – Family Plan - $48.26 per week or $2509.52 per year

Empire Plan – Individual Plan - $11.75 per week or $611.00 per year

The Presidential Emergency Board (PEB) report recommendation for M-N Coalition members was no co-payment for health and welfare benefits for current members and only 1.5% of the first 40 hours salary for new hires.

At the current Trainman's rate, this would only amount to $12.53 per week or $651.56 per year. This is $1897.96 less per year than the family plan co-payment for new ACRE hires.