Spiking, which is legal in most places, has come under increased scrutiny in the past couple of years. As private-sector workers have fallen upon tougher times and have seen their retirement savings shrink, anger has grown over what are perceived to be overly generous retirement benefits for public employees. In particular, six-figure pensions that can result from spiking have drawn headlines.
California, Massachusetts and Georgia are among some states with bills or proposals pending to ban pension spiking or to make it harder to do.
Local governments are also moving on the issue. Earlier this month, the board of the Contra Costa County Employees Retirement Association approved a measure that prohibits using increases in pay in the final years of employment to get bigger pensions. The rule only applies to new hires.
Carroll Wills, communications director for the California Professional Firefighters union, which has about 30,000 members, said his organization is studying the California bill on pension spiking to ensure it doesn't infringe on collective bargaining rights and doesn't eliminate legitimately earned retirement benefits. "To the extent the legislation focuses on people who manipulate things to artificially pad their retirement, that's what reform means, not attacks on the system as a whole," he said.
Mr. Cuomo for several years has pursued a "pay to play" investigation into potential abuses in the management of New York's $129 billion pension fund. The attorney general's new line of inquiry marks a shift toward looking at moves by pension beneficiaries to maximize benefits.
According to recent census data, Mr. Cuomo said, New York state had an overall pension cost of $486 a resident in 2007, the highest in the nation. The average annual pension payment to each beneficiary is $25,000, but some take in more than $300,000, Mr. Cuomo said.
He cited an example of a police officer with a salary of $74,000 who earned more than $125,000 in overtime in his final year of employment. That led to pension payments partly based on a salary of about $200,000 in his last year of work, which over time will cost taxpayers an additional $1.2 million, Mr. Cuomo said.
"You can see how quickly these numbers get large," said Mr. Cuomo, the likely Democratic nominee in the race for New York governor this fall.
Mr. Cuomo said his office is sending letters to 28 state agencies and local governments to obtain payroll information and other data.
Separately, attorneys for a defendant in Mr. Cuomo's pay-to-play investigation, Hank Morris, earlier this week filed a motion to dismiss the 123-count indictment against him.
Mr. Morris, a former adviser to the state comptroller, was indicted last year along with a former deputy comptroller on allegations that they effectively required money managers to pay Mr. Morris before they could win lucrative contracts from the pension fund.
The former deputy comptroller, David Loglisci, who pleaded guilty last week in state court in New York City to a fraud charge, said at the time that Mr. Morris ensured investment decisions were made partly to reward "political cronies" and Mr. Morris's friends.
Lawyers for Mr. Morris argued in the motion that no false representations were made to the pension fund about the merits of investments or services. They also said the investments were purchased at a fair price, and that there are no allegations that the pension fund or private equity firms that did business with it suffered "economic injury."
They asserted that the way business was conducted at the pension fund was part of "age-old traditions," and that it shouldn't be a shock to anyone that knowing the right people and having political connections matter. There "was no crime here," they wrote.
Write to Gina Chon at firstname.lastname@example.org