SPD Errors - Retirement Filing Requirement and the Missing Early Retirement Option

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. In an October 10, 2009 posting I started pointing out some of those errors. That post dealt with a error with respect to the purchase of prior service

In this posting I want to point out an error on page 34 and the failure to mention the early retirement option for 62/5 plan members.

Filing Error

The errors on page 34 involves an alleged filing requirements for service retirement under the 62/5 retirement plan. The incorrect text is listed below with the errors highlighted in bold italics:

Tier 4 members in the 62/5 Plan who are on active payroll and meet all eligibility requirements may file a service retirement application (Form #521) no earlier than 90days before, and no later than one day before, their effective retirement date.

For a Tier 4 member in the 62/5 retirement plan, there is no statutory basis for either of these two requirements stated above. The following text is the statutory language defining the eligibility requirements for the 62/5 retirement plan (Section 603 NYS RSSL):

§ 603. Eligibility for service retirement benefits; age and service requirements.

a. The service retirement benefit specified in section six hundred four of this article shall be payable to members who have met the minimum service requirements upon retirement and attainment of age sixty-two,...

The statute does not require the member to be on active payroll when filing for retirement. In fact it does not even require that the member file an application. The filing is only an administrative convenience and surely not the basis for denying a retirement benefit.

This almost exact issue was actually litigated in 1977 with a decision from the Court of Appeals in Rapp v NYCERS, 42 N.Y. 2d 1 [1977].

In that case the court held that since the statute, Section 13-151.3 of the NYC Administrative Code, did not specifically require the member to be “in city-service” when filing for retirement but only to be a member of the retirement system. The member’s retirement application, therefore, filed after the member was terminated from service, was a valid application and the member was entitled to a service retirement under Section 13-151.3.

While the legislature can obviously impose an “in active service” filing requirement, the NYCERS trustees cannot.

See Doctors council v NYCERS, 71 N.Y. 2d 669, 676 [1988].   "The NYCERS Board of Trustees 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 here by the City, would allow the agency to, in effect, amend the heart of this statute."

The end result is that a Tier 4 member in the 62/5 retirement plan (Section 604.a, NYS RSSL) can file a retirement application whether or not he/she is on an active payroll(“in active service”). It is clear that the 62/5 plan has no statutory “on active payroll” filing requirement.

In some Tier 1& 2 retirement plans (CPP & ISF) and the Tier 4 55/25 plan (but not the 57/5 plan), there are specific “active service” filing requirements for service retirements. But the 62/5 plan in Tier 4 has no such wording.

The error with regards to the filing at least one day before the effective retirement date is a minimal error but technically a member can file a retirement application on the effective date of the retirement. Without specific legislative authority NYCERS can not invalidate a properly filed application. In fact, an application can be written on a plain piece of paper and be valid.

Early Retirement Option

Strangely there is no mention in the SPD of the early retirement option for members in the 62/5 plan. This early retirement benefit was enacted in 2000 (Chapter 553) and is defined in Section 603.i.2 of the NYS RSSL. In the sane vain as Section 603.a it also has no “on active payroll” retirement application filing requirement. The relevant wording of the statute is quoted below:

i. 2. A member of the New York city employees' retirement system or the board of education retirement system of the city of New York who has met the minimum service requirement, but who is not

(a) a participant in the twenty-five-year early retirement program, ...or   (b) a participant in the age fifty-seven retirement program,...or   (c) a New York city transit authority member, ...

may retire prior to normal retirement age, but no earlier than attainment of age fifty-five, in which event,unless such person is

a member of the board of education retirement system of such city who is otherwise eligible for early service retirement pursuant to subdivision c of section six hundred four-i of this article,

the amount of his or her retirement benefit computed without optional modification shall be reduced in accordance with the following schedule:

(i) for each of the first twenty-four full months that retirement predates age sixty- two, one-half of one per centum per month; and   (ii) for each full month that retirement predates age sixty, one-quarter of one per centum per month, but in no event shall retirement be permitted prior to attainment of age fifty-five.

This means that a Tier 4 member in the 62/5 plan with at least five years of credited service can apply for benefits anytime between age 55 and 62 whether on payroll or not. There is, of course, a scaled reduction in benefits for filing before age 62.