How can changes in the law affect retirement eligibility?

A recent case before the State of New York Court of Appeals showed how changes in the laws over the years can impact the eligibility of different types of employees to retirement credit.

The Matter of Patrick J. Lynch v. City of New York involved the New York City Police Pension Fund, which was the retirement program for police officers employed by the New York City Police Department (NYPD).

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The legislature wanted to address the issues of steeply mounting pension costs and budget constraints. Thus, in 1976, it created tier 3, a program which aimed to provide uniform benefits to all public employees and to eliminate the former program’s costly special treatment of selected groups.

In 2016, the Patrolmen’s Benevolent Association of the City of New York, Inc. and its president filed a lawsuit on behalf of its members. The association alleged that certain parties – including the pension fund and the City of New York as a public employer – refused to allow tier 3 officers to obtain credit toward retirement eligibility for prior non-police service.

This refusal violated certain provisions of the Retirement and Social Security Law and of the New York City Administrative Code, the association said. The denials of credit breached a 2002 settlement agreement that resolved past litigation over the issue of what prior service counted toward police officers’ retirement eligibility, the association added.

The New York Supreme Court ruled in the association’s favor. It made the following findings:

• Section 513(c)(2) of the Retirement and Social Security Law had the effect of creating equivalence between tiers 2 and 3 for the purpose of obtaining credit for prior service, but this was “frozen in time” so that tier 3 members could get the same creditable service benefits as tier 2 members did in 1976
• The post-1976 provisions upon which the association relied were inapplicable to tier 3 officers
• However, a pre-1976 provision of the Administrative Code required the city to allow tier 3 officers to credit non-police service toward their retirement eligibility
• The 2002 agreement did not extend any benefits to tier 3 officers because there were no such officers when the agreement was made

The Appellate Division modified the Supreme Court’s decision. It held that:

• The provisions upon which the association relied required the city to permit tier 3 officers to credit non-police service toward their retirement eligibility
• Section 513(c)(1) of the Retirement and Social Security Law provided tier 3 members with the same eligibility requirements for “prior service in defined public employment” as article 11 provided for tier 2 members
• Section 513(c)(2), in effect, excluded tier 3 police members from those broader eligibility requirements
• The 2002 settlement agreement did not extend benefits to tier 3 members

Suit against public employer fails

The issue in the present case was whether tier 3 officers who otherwise might be eligible for retirement credit could use the provisions discussed in this case to apply prior non-police service toward their retirement eligibility.

The State of New York Court of Appeals issued a decision dismissing the association’s entire lawsuit.

According to the court, the plain language of section 513(c)(2) limited the service that tier 3 police officers could credit toward their retirement eligibility to that which tier 2 officers were entitled before July 1, 1976. Under the provision, a tier 3 officer could obtain credit for prior service “only if” a tier 2 officer could have done the same at that time.

The court concluded that tier 3 officers could receive retirement credit only for prior police service. This was because – before July 1, 1976 – tier 2 officers could count only prior police service toward their retirement eligibility, given that the Administrative Code stated that these officers would be ineligible for retirement until they served in the police force for a certain minimum number of years.