No Contract and Pensions

The following is a very good question that I just received from a recent retiree:

Dear Mr. Murphy,

I and probably many other recently retired NYC employees are probably wondering the same thing. If, by some miracle, the next mayor does the decent thing and awards retroactive raises to New York City municipal employees, what happens to those of us who worked during that time when we received no raises but are now retired?

1. Do we get a lump sum retroactive check to cover the time we worked without a raise that has now been granted? 2. More importantly, do the retroactive raises become part of our Final Average Salary and will our pensions be increased accordingly by NYCERS?

Sincerely,

Usually when the city and a union retroactively settle a contract, everyone working during the retroactive period gets a lump sum back payment for that period including workers who have retired before the settlement date. In this scenario the back pay is included in the retiree's compensation base and is used to recalculate his/her pension benefit. So far, so good.

Collective bargaining agreements, however, are free form contracts that can be structured in any way that the two parties agree to. As far as I know all city unions are currently working without a contract. The old contracts are in force on a continuing basis. The settlement of these contracts at some point in the future is going to be a difficult feat no matter who is elected the new mayor because of the length of the retroactive period.

I would be very worried about what provisions the parties will agree to in order to reach a settlement.

If the retiree's union agrees to a provision that a worker must be on active payroll on the date that the contract is settled, for whatever reason, then recent retirees from that union will receive no back pay and their pension benefit will remain the same.

In this environment it would be prudent to postpone retirement until after the contract is settled. I know that is not always possible for some workers. In addition some unions have notorious reputations for buckling under during negotiations and creating havoc for other unions. Recent retirees should stay in close contact with their unions and try to protect their interests in the negotiations.

I wish I was optimistic about these pending contracts. There should be an effective binding arbitration mechanism to prevent this inevitable stalemate. Now the stakes have become too high.