Limited Time to Implement Early Retirement Incentive Option
Limited Time to Implement Early Retirement Incentive Option
Chapter 105 of the Laws of 2010, effective June 2, 2010, establishes a two-part temporary retirement incentive program including towns that participate in the New York State and Local Employees' Retirement System (ERS). This program does not apply to Police and Fire Retirement System members.
Part A is a position based incentive which must be exercised by the adoption of a local law on or before August 31 2010. Part B is an age and length of service based incentive which must be exercised by the adoption of a local law on or before September 1, 2010. A town board may decide to provide either Part A or Part B incentives or a town board may decide to offer both Part A and Part B or neither Part A or Part B.
Part A (Targeted Incentive)
This incentive applies to positions targeted by the town board for early retirement and is thus not available to all town employees. In addition, this incentive is not available to elected town officials. Town employees serving in targeted positions must be at least 50 years old with ten years of service credit in the retirement system or be at least 55 years old with at least 5 years of service credit in the retirement system. In addition eligible employees must have been on the payroll as of February 1, 2010 and in active service during the open enrollment period. Part A requires the town board to establish an "open period" during which eligible employees can retire and be entitled to incentive benefits. The open period must be at least 30 days but not more than 90 days. Additionally, it cannot begin before June 2, 2010 and cannot extend beyond December 31, 2010. The incentive that is available under Part A will provide eligible employees with one additional month of service credit for each year of service credit as of the date of retirement. The maximum amount of additional service credit provided under Part A is three years.
If a town board does not wish to eliminate the targeted position, the town board must adopt a savings plan. According to ERS the plan must demonstrate that replacement employees' base salaries result in a minimum savings of 50 percent of the targeted employees' combined two-year salaries during the following two years.
Chapter 105 requires the town board to adopt a local law which must be completed no later than August 31, 2010. In addition to filing the local law with the Secretary of State, the town board must also file a certified copy of that local law with the Retirement System. The local law must indicate the type of incentive (Part A or Part B) on the local law.
The certified copy of the local law must be accompanied by an affidavit stating whether employees are eligible for a separate, employer-provided incentive through a collective bargaining agreement, or by any other arrangement with their employer, and if the employer will allow employees to collect both benefits. The affidavit must also indicate the payment option selected by the employer. The town board may choose to pay the cost in one lump sum or in five annual installments with the first installment due February 1, 2012. The estimated annual cost may be determined by multiplying the annual salary of those anticipated to retire by the appropriate rate. That figure should then be multiplied by five to determine the total five-year cost. At the conclusion of the incentive program, the Retirement System will calculate the cost for each employer that participated in Part A. Employers are also required to submit a list of the names, Social Security numbers and registration numbers of members eligible for Part A.
The Retirement System has sample local laws, affidavits and cost work sheets on their website or available upon request.
OSC Retirement System Website
http://www.osc.state.ny.us/retire/employers/incentive/index.php
OSC Retirement System Contact
Mary Ellen Kutey, Assistant Director, Member & Employer Services Bureau at (518) 474-0167or RTEmpSer@osc.state.ny.us
Part B (Age 55/25-year Retirement Benefit)
This incentive is not targeted to achieve cost savings by the elimination of particular positions identified by the town board but rather seeks to achieve cost savings by providing authority to the town board to provide town employees in Tier 2, 3 and 4 who are at least age 55 and have 25 or more years of service to retire without a benefit reduction. Eligible employees would have between October 1, 2010 and December 29, 2010, to retire under the Part B early retirement incentive. All employees who meet the age and service requirements and retire during the open period are eligible for the benefit unless town board determines that the employee's position is critical to the maintenance of public health and safety. Any individual denied may request a review of that decision under Article 78 of the Civil Practice Law and Rules. The town board must submit a list of excluded employees to the ERS by the beginning of their open period. If a list is not received by this date, employees who are otherwise eligible for this benefit will not be denied.
Chapter 105 requires the town board to adopt a local law on or before September 1 2010 in order to offer Part B to eligible town employees. In addition to filing the local law with the Department of State, a certified copy of the local law, accompanied by an affidavit indicating the payment option selected by the employer must be filed with ERS. The affidavit should indicate whether the town desires to pay the incentive program cost in one lump sum or in five annual installments with the first payment due February 1 2012. The Retirement System has sample local laws, affidavits and cost work sheets on their website or available upon request.
For more information on Chapter 105 and the two early retirement incentive please see the OSC ERS website or contact the State Retirement System
OSC Retirement System Website
http://www.osc.state.ny.us/retire/employers/incentive/index.php
OSC Retirement System Contact
Mary Ellen Kutey, Assistant Director, Member & Employer Services Bureau at (518) 474-0167 or RTEmpSer@osc.state.ny.us
The Comptroller's Website has tools available to help you calculate the potential cost and benefits to offering an early retirement incentive. In addition to the OSC online tools, the Comptroller's Office issued a report in 2002 analyzing the costs and benefits to local governments and school districts regarding the implementation of early retirement incentives. It is important to note that this report does not involve the calculation of a new Tier V with respect to potential cost savings. Read the report here.
The Empire Center for New York State Policy which is a project of the Manhattan Institute for Policy Research, recently issued a report analyzing the costs and benefits of implementing early retirement incentives. You may read their report here http://www.empirecenter.org/pb/2010/05/ppwprint6051110.cfm.
