Governor Patterson Signs Teachers Early Retirement Law
April 15, 2010
Yesterday, April 14, 2010, among ten bills signed into law by Governor David A. Paterson was Senate Bill S-6972/Assembly Bill 10065 (the “55/25 legislation”), which is the early retirement incentive bill for members of New York State United Teachers ("NYSUT") who belong to either the New York State Employee Retirement System ("ERS") or the New York State Teachers Retirement System ("TRS"). The 55/25 legislation was first announced as part of the Tier V pension legislation that was signed into law and previously discussed on this blog. The 55/25 legislation allows NYSUT members who are members of ERS or TRS, are at least 55 years of age, and have attained at least 25 years of creditable service to retire without the reduction in retirement benefits that would normally apply to retirement system members who are on Tiers 2, 3, or 4, who do not have 30 years of service.
Below is a summary of the 55/25 legislation and what it means for employers of NYSUT members.
1) Eligibility for 55/25 Legislation
- Must be a member of ERS or TRS;
- Must be a member of NYSUT;
- Must be an employee of an educational employer (school district, board of cooperative educational services, vocational education and extension board, institution for instruction of the deaf or blind, State University of New York ("SUNY"), and community colleges) that employs members of NYSUT;
- Must be at least 55 years of age and have 25 years or more of creditable service;
- Must be on active service, which is defined as being in continuous service and on the payroll from February 1, 2010 until June 1, 2010. However, the following classes of employees are deemed to be on “active service” by the legislation and thus eligible for the early retirement benefit:
- Those employees on a paid leave of absence; and
- Those employees on an unpaid leave of absence that does not exceed 12 weeks from February 1, 2010 to the commencement of the “open period” (which is June 1, 2010 for school districts).
2) Timing of Benefit
- The open period for employees of school districts begins on June 1, 2010 and ends on August 31, 2010. For SUNY and community colleges, while the open period is capped at 90 days, and must end on or before December 31, 2010, the legislation does not mandate a certain date for the commencement of the open period. In order for the law to apply, the effective date of the retirement must be during the open period.
- Employees who wish to apply for early retirement without penalty under this benefit must fill out the appropriate retirement application not less than 14 days prior to the effective date of their retirement.
3) Cost of 55/25 Legislation
- The per-member cost for each employee who receives this early retirement benefit will be approximately 110% of the employee's final average salary.
- The total cost of this legislation is estimated to be $13.2 million, or .09% of payroll.
- For every 100 employees that retire under this legislation, there will be an increased cost of approximately $260,000 to the State and $360,000 to participating employers.
- The legislation estimates the number of people who will retire under this legislation will be under 1000.
4) Impact on Retirement Incentives in Collective Bargaining Agreements
- The legislation explicitly states that it does not affect in any way other retirement incentives provided by collective bargaining agreements that were negotiated prior to the effective date of the legislation.
