Saturday, October 10, 2009

Errors in New SPD for Tier 4 Members in the 62/5 Plan -- Buyback of Previous Service

NYCERS has recently published a new Summary Plan Description (SPD) for Tier 4 members in the 62/5 plan. Unfortunately, there are errors in the SPD. Over several future postings I will try to point out the errors.

Specifically on page 11, dealing with the purchase of prior “New York State” service, NYCERS incorrectly states the primary requirement. The text is listed below with the error highlighted in bold italics:

PURCHASED SERVICE (BUY-BACK)

Purchased Service, commonly referred to as buy-back, is previous full-time or part-time public service rendered in the employ of a public entity anywhere in New York State that has been fully paid for and credited. Previous service will be credited to members who have rendered at least two years of Membership Service.

Generally, in order to purchase previous service, members must have been on the payroll of a public entity (not a private entity) in a position which would have allowed membership in a public employee retirement system in New York City or New York State. One benefit of purchasing previous service is the inclusion of such service as part of your Credited Service, which ultimately will enhance your retirement benefit. Another benefit is that purchasing such service may accelerate the cessation of your Basic Member Contributions (see page 6). Purchasing service does not change your membership date.

Chapter 414 of the Laws of 1983, as amended by Chapter 552 of the Laws of 2000

RSSL §609 subdivision b(1)

This is a misstatement of Chapter 552. The actual controlling text from Chapter 552 of the Laws of 2000 is quoted below with underling indicating the new word being put in the law. The full text of the Section 609 modification is listed at the end of the posting.

§ 3. Paragraph 1 of subdivision b of section 609 of the retirement and social security law, as added by chapter 414 of the laws of 1983, is amended to read as follows:

1. A member shall be eligible to obtain retirement credit hereunder for previous service with a public employer if retirement credit had previously been granted for such service or if such service which would have been creditable in one of the public retirement systems of the state, ... , at the time such service was rendered, if the individual had been a member of such retirement system

It is easy to see that NYCERS has deviated from the plain wording of Chapter 552. The effect of this error is to deny members the right under Section 609 to buyback CETA service("NYS" service from the 1970's which was financed by federal CETA funds).

The legislature could have easily used the wording

"which would have allowed membership in a public employee retirement system in New York City or New York State"

but they instead used

"which would have been creditable in one of the public retirement systems of the state, ... , at the time such service was rendered, if the individual had been a member of such retirement system"

In 2000, while I was executive director at NYCERS, I clearly instructed NYCERS staff on the correct application of Chapter 552. I wrote a memo pointing out that law stated that service was eligible if it would have been credited to a member at that time and not that the service would have made the member eligible to join a retirement system at that time. The Law Department was not happy with my proper interpretation. They knew, however, that they had no legal basis to overturn the correct interpretation. If the Law Department had a solid legal argument, they would have been obligated to overruled my position.

Obviously, now that I am no longer executive director, NYCERS feels free to overturn the correct interpretation and illegally restrict the buyback benefit. This fits into a growing pattern on NYCERS' part to illegally deny benefits to NYCERS members and retirees. See Disabled EMT Retirees. This creates an unnecessary and expensive burden on NYCERS members and retirees to defend themselves against NYCERS.

Also on page 11, NYCERS incorrectly states that a member must be on payroll in order to apply to buyback service. The following is from the SPD:

In order to purchase previous service, you must complete an Application (Form #241from you;Form 242 and/or 243 from your employer) and file it with NYCERS while you are on active payroll. You may also apply online provided that you are a MY NYCERS accountholder. If you separate from City service, you are generally not allowed to initiate a new claim to purchase previous service unless you are purchasing service to reach a threshold for vesting or disability, five years or ten years, respectively.

Nowhere in Section 609 is it stated that a member must be on active payroll to apply to purchase service. The only requirement is that he/she be a member when he/she files.

In 1988, the Court of Appeals in Doctors Council v. NYCERS clearly stated that:

"The NYCERS Board of Trusrees surely lacks the authority to create retirement eligibility; it likewise lacks the power to disentitle employees whom the legislature has endowed. To countenance the latter, as has been urged by the City, would allow the agency to, in effect, amend the heart of this statute."

The trustees have no plain language authorization to restrict filing eligibility to only members on active payroll. There is no such authorization in Section 609. If there was, you can be sure that NYCERS would have quoted it.

In addition, NYCERS' attempt to carve out exceptions to this unauthorized filing restriction completely underscores the lack of statutory authority to restrict a member's right to purchase prior "NYS" service under Section 609.

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The full text of the Section 609 modification in Chapter 552 of the Laws of 209

§ 3. Paragraph 1 of subdivision b of section 609 of the retirement and social security law, as added by chapter 414 of the laws of 1983, is amended to read as follows:

1. A member shall be eligible to obtain retirement credit hereunder for previous service with a public employer if retirement credit had previously been granted for such service or if such service which would have been creditable in one of the public retirement systems of the state, as defined in subdivision twenty-three of section five hundred one of this chapter, at the time such service was rendered, if the individual had been a member of such retirement system and the member has rendered a minimum of [five] two years of credited service after July first, nineteen hundred seventy-six or after last rejoining a public retirement system, if later; provided, however, retirement credit may be granted for service which predates the date of entry into the retirement system if such service is otherwise creditable and the member satisfied the minimum service requirements set forth in this subdivision[: and

(a) Was rendered by an employee during which employment he became a member of the retirement system; or

(b) Was] and was rendered by an employee of a public employer during which employment he was ineligible to join a public retirement system provided that such public employer was participating in a public retirement system of the state at the time of such employment, or is so participating at the time that such credit for such previous service is being sought.

2 comments:

Andrew Mizell said...

Dear Mr. John Murphy

It might be a good thing for you to tell all of the 62/5 retired members just how to actually apply for and get all of there vested Buy-Back of $8,708. Dollars over a period of 10 to 13 years that is now do to them because thats the one thing that NYCERS dose not tell you how to do. Just maybe you can tell us please do so

signed: MM 62/5 Member

Andrew Mizell said...

Type of retirement Vested $8,708 but NYCERS hasn't yet paid me any of my own vested money only $168. Dollars a month and nothing from my vestings of some 10 to 13 years of service time employment.