A Retirement System Glossary of Terms (Part 3)

The New York City Employees Retirement System has gone to great lengths to prepare this Glossary of Terms. I recommend you study their meaning. Should you have any questions please contact me at: rollover@optonline.net.

Final Average Salary (FAS)

The greater of the average annual Wages earned during any three consecutive calendar year periods, or the final 36 months immediately preceding the member's retirement date. But, if the salary earned during any year included in the calculation of the member's FAS exceeds the specific limits for Tier 2, Tier 3 or Tier 4 members, the amount in excess of such limit is excluded from the computation. For members who did not work full-time, or who had absences without pay in the 36 months immediately preceding their retirement, the period used in computing the FAS will be greater than three years.

Final Compensation

The average compensation earned during: the five-year period immediately preceding the member's retirement date, or any consecutive five calendar year period prior to the member's retirement date that would provide him or her with the greatest average compensation.

Where the period used to determine Final Compensation is the period which immediately precedes the date of retirement, any month or months (not in excess of 12) during which the member was on authorized leave of absence at partial pay or without pay are excluded and an equal number of months immediately preceding the five-year period shall be substituted in lieu thereof to provide Credited Service totaling five calendar years.

Final Salary

For members of the uniformed forces of the departments of Sanitation and Correction who joined the retirement system prior to

July 1, 1973: the annual rate of salary earnable on the day before the date of retirement.

For all others: the salary earnable in the year ending on the day before the date of retirement or alternatively, the average annual compensation during any three calendar years designated by the member, if in a Career-Pension-Plan Position.

Income Limitation

The fixed dollar maximum amount of Personal Service Income a pensioner receiving a Tier 4 Disability Retirement Benefit can earn in any calendar year. The Income Limitation is established annually based on percentage increases or decreases in the prior year's Consumer Price Index.

Members' Contribution Accumulation Fund (MCAF)

An account maintained for each Tier 3 and Tier 4 member into which the "basic" contributions of 3 percent of Wages deducted from the member's paycheck each payroll period are deposited, plus interest earned on such contributions at the rate of 5 percent, compounded annually.

Membership Service

Service rendered after joining NYCERS— includes all service while on the payroll of the City of New York or a Participating Employer and Military Service.

Military Service

There are various laws that allow members to purchase service credit for time spent on active duty in the U.S. military. They are sections 242, 243 and 244 of the New York State Military Law, the Federal Veterans Reemployment Rights Act (VRRA) and ARTICLE 20 of the Retirement & Social Security Law as added by Chapter 548 of the laws of 2000. Each law has different provisions for granting of service. A member is entitled to receive credit for Military Service under whatever law provides him or her with the greatest benefit.

Under all provisions, Military Service must have been satisfactorily completed and a discharge under honorable circumstances received. Under the VRRA, a member is eligible to receive credit for the entire length of mandatory military service and up to four years of voluntary military service, but only time actually spent on active duty.

Minimum Accumulation

The amount of normal contributions accumulated with interest to the earliest date for service retirement, less the amount of the reserve for Increased Take-Home-Pay on such date. For a member in the Career Pension Plan, the amount of normal contributions is accumulated to the date on which he or she either completed or could have completed 25 years of Career Pension-Plan qualifying service.

Mr. Frank is a fee-only Retirement Financial Planner and a retired city high school Teacher of Accounting. He can be reached by telephone at (732) 536-9472, or via e-mail at rollover@optonline.net.