Saturday, January 23, 2010

Part A - Tier 5 - NYS Police & Fire

Part A of Chapter 504 deals with new police officers and firefighters who work in NYS and join NYS-PFRS on or after 1/1/2010. It also provides an election process for such members who joined NYS-PFRS between July 1, 2009 and December 31, 2009. Chapter 504 does not effect NYPD and FDNY. The NYSLERS web site has a nice PDF chart comparing the old and new benefits.

Part A is effective January 9, 2010, 30 days after 12/10/2009.

The significant feature of Part A is the creation of Article 22 (Tier 5) which is a reduction overlay on Tier 2.

It impacts all such police officers & firefighters who join NYS-PFRS on or after 1/1/2010. These employees are again covered by Tier 2 but with Article 22 reductions.

Police officers and firefighters outside NYC who have joined NYS-PFRS on or after 7/1/09 but before 1/1/2010 are covered by Tier 3.

Chapter 504 provides a 120 day election period in which these employees may elect to have their benefits recalculated according to Tier 2 with the new Article 22 reductions. The wording is strange. They are not electing to be subject to Article 22, only to have their benefits recalculated according to Article 22/Tier 2.They may elect to have their benefits calculated using Article 22 and Tier 2. These members appear to retain Tier 3 rights but will generally be receiving benefits under the new Article 22/Tier 2 structure.

New NYC police officers and firefighters who were hired on or after 7/1/2009 are still trapped in Tier 3. Such members have automatic membership in NY-PPF and NY-FPF as of the date of their hire.

According to Chapter 504, Tier 2 coverage for state police officers and firefighters picks up again on January 1, 2010 and no longer has a end date as it did up to June 30, 2009. There was temporary break with Tier 3 coverage between July 1, 2009 and December 31, 2009.

Interestingly, when Tier 2 was enacted in 1973, it was a reduction overlay on Tier 1. In contrast, Tier 3 and Tier 4 are new stand alone benefit structures.

ITHP benefits in Tier 1 and 2 are no longer subject to periodic renewal. This is actually a benefit to NYC Police and Fire pension members.

All supplemental retirement allowances or pensions are no longer subject to periodic renewal.

Tier 3 becomes permanent and not subject to periodic renewal. As of present only NYC police officers and firefighters and NYS and NYC correction officers are covered by Tier 3.

Employees who are eligible and become Tier 4 members after 8/23/1983 had no rights under Tier 3.

Tier 4 has now become permanent and not subject to periodic renewal.

Article 22 (Tier 5) for NYS police officers & firefighters employed outside of NYC who join the NYS-PFRS on or after 1/1/2010 imposes the following reductions on Tier 2:

  1. service retirement requires 10 years of creditable service. It was 5 years

  2. military service under Sections.302.29-a and 302.30 (RSSL) is included

  3. Overtime (OT) above 15% of non OT wages is excluded when calculating 3 year average. There is still a 20% cap for each year compared to the avg. of prev. 2 years.

  4. Members must contribute 3% of annual wages. Contributions stop when member reaches service cap. (usually 30 years, but could be different). This money will not provide any type of annuity. Previously NYS-PFRS was a non-contributory system. There is no mention of applicable interest rate or the return of these contributions in case of separation from service, termination or death. This will have to be corrected in the future.

  5. Tier 3 NYS-PFRS members (join after 7/1/2009) may elect to have benefits calculated under Article 22. Such members must file within 120 days after the enactment date (1/9/2010). Chapter 504 appears to have created a special small group who joined NYS-PFRS between 1/1/2010 and 1/8/2010. They technically have rights under Tier 3 and Article 22/Tier 2 without the need of making an election. NYS-PFRS will probably make some administrative rule dealing with this issue.

    Note: This was done in funny manner. I would have had them elect to be subject to the provisions of Article 22. I am not clear that this election actually gives these members rights under Tier 2. This possible problem, however, can be handled administratively, since it is clear that the legislature wanted to offer the opportunity to choose Tier 2 with Article 22 limitations.

  6. Provisions of Article 22 (Tier 5) takes precedent over conflicting provisions of Article 11 (Tier 2). Tier 5 members (NYS-PFRS) are essentially Tier 1 members with Tier 2 and Tier 5 benefit reductions.

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