A major pension funding inequity that is being ignored by the union leadership:

For the unions on Metro-North to receive the MTA Defined Benefit Pension Plan, their members had to give up the full amount of the funds contained in their Vanguard accounts. Two important points must be taken into consideration here:

First – Why does a union member have to give up all of the funds in their Vanguard account and also contribute 3% of their entire salary into the Pension Plan for ten years (salary cap is currently up for ratification)?

A) – MTA M-N management only had to give up the funds available in their Vanguard accounts to receive the MTA Pension. MTA management does not contribute 3% of their salary into this MTA pension plan. M-N management had fewer total available funds in their Vanguard accounts than M-N union employees. Interesting to note that MTA management is predicting major pension deficits in the foreseeable future, yet they themselves do not contribute into the pension plan. Maybe it is time they contribute 3% of their salary into the MTA pension plan for ten years. When you make between $100,000 and $250,000 a year, the 3% salary contribution hurts. Upper management would have to contribute between $3,000 and $7,500 per year into the plan for ten years.

B) – A M-N employee currently in the middle of their career will contribute way more financially into this MTA pension plan than a new hire for the same exact retirement plan and retirement benefit. For example: an employee hired out in 1989, has 17 years of service and needs to work another 13 years before retirement age. This employee had $35,000 in his Vanguard account. This employee makes $25.00 an hour, $52,000 a year. For the next ten years the employee will contribute 3% of their salary (without overtime or wage increases) (52,000 x 3% = $1,560 per year for ten years), which amounts to $15,600. The total contribution this employee paid into the MTA pension plan is $50,600 ($35,00 from the Vanguard + $15,600 in 3% salary contributions for 10 years).

What does a new hire contribute in the MTA pension plan? They have no Vanguard account and will only contribute 3% of their salary for the first ten years. Keep the same $25.00 an hour (also no overtime or salary increases). 1 st year salary is 70% of $52,000 or $36,400. Their 3% salary contribution equals $1,092. 2 nd year salary is 75% of $52,00 or #39,000. 3% salary contribution is $1,170. 3 rd year salary is 80% of $52,00 or $41,600. 3% salary contribution is $1,248. 4 th year salary is 85% of $52,000 or $44,200. 3% salary contribution is $1,326. 5 th year salary is 90% of $52,000 or 46,800. 3% salary contribution is $1,404. 6 th year thru the tenth year their salary is $52,000 and the 3% salary contribution is $1,560. Add these 3% salary contributions up and you get $14,040.

The difference between the MTA pension contributions for the existing employee $50,600 ($35,00 from their Vanguard + $15,600 from their 3% salary contributions) from the new employee $14,040 (just their 3% salary contributions for 10 years) is $36,560. Why must the existing employee pay an additional $35,560 for the same exact pension plan with the same exact payout formula?

Second – Did the MTA have the right to take away your entire Vanguard account (principal and investment income)? The MTA should have only been entitled to take back only the principal amount of the Vanguard (their contributions), not the investment income that each employee received from their investment options. If an employee lost some of or the entire principle from their Vanguard account, did the MTA make the employee pay it back to get into the pension plan? No, so why then is the MTA entitled to take away the investment income from each employee that earned additional income on their investments in their Vanguard accounts?

The bottom line is that you were on your own with the Vanguard. That money was yours to invest, which was your retirement plan. If you made additional income from investing wisely then fine, if you made no additional income from investing that was ok, but if you lost the principal through your investing, that was your problem, not the MTA's. The Vanguard account was for you and your retirement. The MTA gave you a percentage of your salary and walked away. If you lost a portion or the entire account, then in retirement you were on your own. The MTA was off the hook. With the same reasoning, how is the MTA entitled to take away our investment income from the Vanguard accounts?

Again, if an employee that lost part of or their the principle in their Vanguard account due to their investment decisions and did not have to pay the principle back to the MTA to get into the pension plan, how can the MTA then be allowed to then take away the investment income that each employee received in their Vanguard account from their investment decisions? Once again the MTA gets away with a double standard.