Final Average Salary and NYSL Employees Retirement System and the NYC Teachers Retirement System

I have been complaining for several years about how NYCERS short changes its retirees when it comes to overtime and part-time earnings. In particular, how it computes the three year period used for determining the compensation base, FAS, used in the benefit calculation.

Someone just recently pointed out to me how the state system, NYSLERS, handles the FAS. Just below are the words for the NYSLRS news website run by the State Comprtoller:

When we calculate your pension, we find the set of consecutive years (one, three or five, depending on your tier and retirement plan) when your earnings were highest. The average of these earnings is your FAE. Usually your FAE is based on the years right before retirement, but they can come anytime in your career. The years used in determining your FAE do not necessarily correspond to a calendar year. For FAE purposes, a “year” is any period when you earned one full-time year of service credit.

The state system has been doing this since 1983, the start of Tier 4, based on Section 608.b (RSSL). In 2010, members of the NYC Teachers Retirement System (NYCTRS) were added to Section 608.b to provide a statutory basis for previous practice.

On May 31, 1988 the NYS Court of Appeals unanomously found that NYCERS had no legal basis to deny membership to part time workers. In 1992, the state legislature passed legislation to correct the mistakes caused by NYCERS improper actions, one of which was to create a new definition of FAS for all Tier 4 members using a new subsection, 608.d (RSSL), which in turn pointed to another newly created subsection, 13-638.e.(14), in the NYC Admin Code. The new definition in S.13.638.e.(14) was identical to S.608.b. The relevant sections are listed below if you want to follow the bread crumbs.

Bottom line, NYSLERS and NYCTRS are treating their members correctly and NYCERS is screwing all over a large part of its membership. I am putting the NYCERS trustees on notice that they are in violation of the law and they better have a substantial memo from the the NYC Law Department to cover their asses.

In addition, since there are two city pension systems doing two different things with the same statute, the Law Department has a problem. The Law Department has a history of quietly letting two systems go different ways but when one system finds out what the other is doing, the show is over. By the way, do not count on in-house staff with law licenses. They are not your statutory counsel.

FAS Statutes - Tier 4 and 6

Section 608.b (RSSL)

b. Notwithstanding the provisions of subdivision a of this section, with respect to members who first became members of the New York state and local employees' retirement system and the New York city teachers' retirement system before April first, two thousand twelve, a member's final average salary shall be equal to

one-third of the highest total wages earned by such member during any continuous period of employment for which the member was credited with three years of service credit;

provided, however, if the wages earned during any year of credited service included in the period used to determine final average salary exceeds the average of the wages of the previous two years of credited service by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary. With respect to members who first become members of the New York state and local employees' retirement system and the New York city teachers' retirement system on or after April first, two thousand twelve, a member's final average salary shall be equal to one-fifth of the highest total wages earned by such member during any continuous period of employment for which the member was credited with five years of service credit; provided, however, if the wages earned during any year of credited service included in the period used to determine final average salary exceeds the average of the wages of the previous four years of credited service by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary.

Section 608.d (RSSL)

d. Subject to the provisions of subdivision c of this section, and

notwithstanding the provisions of subdivision a of this section,

with respect to members of the New York city employees' retirement system and the New York city board of education retirement system who are subject to the provisions of this article, a member's final average salary shall be determined pursuant to the provisions of paragraph fourteen of subdivision e of section 13-638.4 of the administrative code of the city of New York, provided, however, that the applicable provisions and limitations of the term "wages", as defined in subdivision l of section six hundred one of this article, shall apply to such determinations of final average salary.

Section 13-638.4.e(14) (NYC Admin Code)

(14) (i) Subject to the provisions of subdivision f of this section and the provisions of subdivision c of section six hundred eight of the RSSL, where those provisions are applicable, and

notwithstanding the provisions of subdivision a of section six hundred eight of the RSSL,

for a tier IV member of NYCERS who is not a New York city revised plan member (as defined in subdivision m of section six hundred one of the RSSL) or for a tier IV member of BERS who is not a New York city revised plan member, the term "final average salary", as used in article fifteen of the RSSL, shall be equal to the greater of:

(A) one-third of the highest total wages earned by such member during any continuous period of employment for which the member was credited with three years of service credit;

provided that if the wages earned during any year of credited service included in the period used to determine final average salary exceeds the average of the wages of the previous two years of credited service by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary; or (B) the total wages earned during any six consecutive years from service for which the member received service credit divided by the amount of such service credit earned during that six-year period, provided, however, that "wages", as used in this paragraph, shall mean the applicable provisions and limitations of the term "wages", as defined in subdivision 1 of section six hundred one of the RSSL. (ii) Subject to the provisions of subdivision f of this section where those provisions are applicable, and notwithstanding the provisions of subdivisions a and c of section six hundred eight of the RSSL, for a tier IV member of NYCERS who is a New York city revised plan member (as defined in subdivision m of section six hundred one of the RSSL) or a tier IV member of BERS who is a New York city revised plan member, the term "final average salary", as used in article fifteen of the RSSL, shall be equal to one-fifth of the highest total wages earned by such member during any continuous period of employment for which the member was credited with five years of service credit; provided that if the wages earned during any year of credited service included in the period used to determine final average salary exceeds the average of the wages of the previous four years of credited service by more than ten percent, the amount in excess of ten percent shall be excluded from the computation of final average salary, provided further that "wages", as used in this paragraph, shall mean the applicable provisions and limitations of the term "wages", as defined in subdivision l of section six hundred one of the RSSL.