Tier 2 Service Credit and Contributions

Allowable Police Service

Allowable police service is service credit that when purchased or transferred, gives a member service credit as if they were working for the NYPD during that time, and counts towards retirement. The following are examples of such credit:

• Employment as a uniformed member of the New York City Police Department.
• New York City Employees’ Retirement System (NYCERS) Uniformed Force service (includes uniformed service in the Housing Police Department, Transit Police Department, Department of Correction, Sanitation Department and Emergency Medical Technician for EMT time it must have been performed immediately preceding your appointment as a uniformed member of the New York City Police Department.
• Credit for service as a uniformed member of the New York City Fire Department, provided you applied for such credited service within prescribed time limits and such credited service was properly purchased or transferred to the Police Pension Fund.
• Credit for any service rendered while a member of the New York State Employees’ Retirement System or New York State Police and Fire Retirement System (New York State Teachers’ Retirement System is considered as “other credited service” if purchased under Chapter 646.)

Other Credited Service

Other Credited Service is any service other than Allowable Police Service, that counts as additional service credit (monetary benefit only) beyond your required twenty (20) years. Other credited service includes:

• Service performed while a member in a non-uniformed position within the New York City Employees’ Retirement System (NYCERS) and/or membership in the Board of Education Retirement System. In addition, uniformed service credit that does not immediately precede uniformed service in the New York City Police Department is “Other Credited Service.”

* Provided you applied for such credited service within prescribed time limits and such credited service was properly transferred to the Police Pension Fund.

Buyback of Prior Service

Members must apply and remit payment for all service credit purchases before their effective date of retirement. In the event of retirement prior to completing payment for the service credit purchase, the amount of service credited to the member shall be proportional to the total amount paid.

Chapter 646 of the Laws of 1999

Chapter 646 of the Laws of 1999 amended RSSL § 645, which allows for the purchase of prior service in another retirement system for a membership that has ceased. Chapter 646 may allow for a Tier change or Tier reinstatement depending on membership dates. (Example: having a membership date prior to July 1, 2000, with a previous pension the member would become eligible for benefits and privileges that come with the associated era in the Police Pension Fund.)  A member who may be eligible to purchase service under this provision should contact Membership Services.

Chapter 552 of the Laws of 2000

Chapter 552 of the Laws of 2000 allows members the ability to purchase any prior servicemrendered before becoming a member of the Fund, or any other New York State or New York City retirement system.

Chapter 594 of the Laws of 2000

Under Chapter 594 of the Laws of 2000, members may purchase up to one (1) year for each authorized Child Care Leave.  Members have 90 days from their return to service to apply for the purchase of this leave.

RSSL §1000 Military Buyback

Chapter 41 of the Laws of 2016 which amends New York State Retirement and Social Security Law (“RSSL”) §1000 (also known as a “Chapter 548 buyback”) removes the specified periods of time, medal requirements, and theaters of operation in which military service would have to have been rendered for a service purchase. Members need only have been honorably discharged from the military to be eligible to purchase pre-membership service credit pursuant to RSSL §1000. This law does not permit retired members to purchase service credit.

Retroactive Military Seniority

Retroactive Military Seniority (RMS) is awarded to a member after being appointed to the NYPD from a special list, retroactive to the date the member would have been appointed had the member not been serving in the military.  Members who receive RMS credit from the Department of Citywide Administrative Services (DCAS) receive pension credit retroactive to the date awarded by DCAS.

Upon receipt of a letter from DCAS stating the member has RMS, the member is immediately entitled to the same rights, privileges, and obligations as if he had served continuously in such position from the date of his appointment. A member’s membership date will be adjusted to reflect the RMS Date (RMSD) found in the letter from DCAS; the member’s tier and contribution rate are also adjusted accordingly.  Members with RMS must, however, make pension contributions that were missed during the period between the RMSD and appointment to the NYPD. Contributions must be completed within the repayment period prescribed by law; the maximum repayment period is the time from the RMSD to the NYPD appointment multiplied by 3, up to a maximum of 5 years.  Once contributions are completed within the repayment period, the Pension Fund is required to credit the member’s contribution account with the interest that would have credited during this period.

Please note a member cannot receive RMS and credit for the same period of military service purchased through a buyback. Members who have already completed a military buyback for time covering the RMS period, will receive a refund for the buyback or the Fund will credit the money toward the RMS payment. For further info please refer to the Tier 2 summary plan Description or please contact the Membership Unit 212-693-5850 with any questions regarding Tier 2 information about buying back prior city/state service.

Contributions

During active service, members are required to make pension contributions until eligibility for Service retirement, at which point all contributions become voluntary. At the time of hire to the NYPD, members are assigned a contribution rate based upon their age. Member contributions in Tier 2 earn a statutory 8.25% interest, paid by the city, and compounded annually. The contribution rate is applied to the member’s pensionable earnings during their career and when combined with earned interest, creates what is called the “required amount.” The required amount is unique to each member and is the amount necessary to remain in the account to receive a retirement benefit with no reduction. This amount “freezes” when the member becomes eligible for service retirement, as contributions are no longer necessary after such point. Any contributions made after eligibility for service retirement are extra and create an increased benefit if left behind at retirement.

Voluntary Contribution

Members may make additional employee contributions on a voluntary basis equal to 50% of the certified rate of the required employee contributions. These contributions are not covered by section 414h of the IRS code and therefore are subject to federal income taxation. If withdrawn at retirement, these funds are not subject to taxation (tax-free) because they have already been taxed. If these additional contributions are not withdrawn at or prior to retirement, they will provide you with an additional annuity at retirement, provided you do not have a shortage in your account.

ITHP Contributions

Along with making employer contributions to the Police Pension Fund, the City of New York also contributes toward a portion of your employee contributions. These contributions - called Increased Take Home Pay, or ITHP - currently are equivalent to 5% of your gross salary. For example, let's assume your full employee contribution rate would ordinarily be calculated as 7.5% of pay. With ITHP in effect, you contribute 2.5%, and the City of New York contributes 5%. You may elect to waive the ITHP reduction and contribute an additional 5% of your gross salary. These contributions are in addition to your normal pension contributions and would not be subject to federal taxation as per Section 414h of the IRS code. Election of this waiver would not reduce the ITHP contributions of the City of New York.

Excess Contributions/Refund of Excess

If a member has twenty (20) years of service or more, and no shortage, an application may be made for a refund of any excess funds in the member's pension fund account. Should no request be made by the time of retirement, the excess will be multiplied by the member's actuarial factor and the pension allowance will be increased for life by the actuarial value of the excess.

Withdrawal of Contributions

If a member separates from the Fund for reasons other than retirement (resignation, termination, or death) a request for a refund of accumulated contributions plus interest may be made. If contributions are left with the Fund, the money will continue to earn interest for a maximum of five years from the date of separation. After this time, the contributions will no longer accrue interest and will be refunded. If a member has a taxable outstanding loan balance, a Form 1099-R will be generated at the end of the separation year.

Shortages

A shortage occurs when a member’s pension account balance falls below the required amount. Members are responsible for any account shortages. Shortages may occur because of delays in contract settlements. Retroactive pay from a contract settlement does not include the interest that would have been earned on these contributions. Interest earned on contributions is part of a member’s required amount. Pension loans and insufficient contributions are also a contributing factor towards a shortage.

Members may opt to make a lump sum payment(s) or set up biweekly payroll deductions to repay existing shortages.

Tier 2 Credit & Contribution FAQs