Audit Report on New York City Pensioners Working for New York State after Retirement January 1, 2014 to December 31, 2014

Executive Summary

The objectives of this audit are: (1) to identify any New York City pensioners who may be re-employed by New York State (State) and illegally collecting a pension from a New York City retirement system; and (2) to quantify the amount of any improper payments to individuals who appear to be violators of the New York State Retirement and Social Security Law (RSSL) §211 and §212 or New York City Charter §1117 during Calendar Year 2014. 
The City of New York (the City) has five retirement systems that provide retirement benefits for the employees of various City agencies.  The five systems are the New York City Board of Education Retirement System (BERS), the New York City Employees’ Retirement System (NYCERS), the New York City Fire Department Pension Fund (FIRE), the New York City Police Department Pension Fund (POLICE), and the New York City Teachers’ Retirement System (TRS).

The re-employment of retired public employees in public service is governed by the RSSL.  Specifically, under RSSL Article 7, §212, a service retiree (a person receiving retirement benefits other than disability retirement benefits) who is under the age of 65 can be re-employed in New York public service subject to an annual $30,000 earning limitation.¹  This means that a member of one of the five retirement system who retires before the age of 65 who is not collecting a disability pension may collect his/her pension and work for the City or State, as long as he/she does not earn in excess of $30,000 per year from a New York State public service position. If a retiree’s post-retirement earnings in a New York State public service position exceed the annual earnings limitation, the retiree’s pension benefits should be suspended unless the retiree has obtained a waiver under RSSL §211.²

Disability retirees are not subject to RSSL §211 and §212, but in New York City are subject to the New York City Charter §1117, which prohibits a retiree from earning more than $1,800 a year in New York public service unless the retiree’s pension is suspended during the time of such employment.  A retiree’s disability payments are included in the calculation of whether the $1,800 cap has been exceeded.

Audit Finding and Conclusion

Our audit found six POLICE pensioners and four NYCERS pensioners who appear to have violated sections of RSSL §211 and §212 or NYC Charter §1117.  Collectively, for Calendar Year 2014, these pensioners received a total of $216,738 in post-retirement earnings and, potentially, a total of $156,004 in pension overpayments improperly paid to them.

Three POLICE service retirees under the age of 65 and covered by RSSL §211 and §212 were found to be employed at a State agency where each earned more than $30,000 during Calendar Year 2014.  As a result, POLICE paid $35,043 in potential pension overpayments to these three retirees.  In addition, we found three POLICE and four NYCERS disability pensioners who appear to have violated New York City Charter §1117 because they received disability payments and earnings through New York public service of more than $1,800, and did not suspend pension payments during the applicable period of re-employment.  These disability pensioners received a total of $120,961 in potential pension overpayments.

Audit Recommendations

Officials of POLICE and NYCERS should:

• Investigate those individuals identified in this report; if confirmed to have received pension payments in violation of State or City law, recoup the overpayments.
• Send special reminders to its service retirees under the age of 65 and to all disability retirees that clearly state the applicable income limitations and the retirees’ responsibilities regarding compliance with public service re-employment.

POLICE Response

POLICE officials agreed with our recommendations and provided us with information demonstrating the steps that they had taken to recoup the overpayments and methods that they are using to inform their members regarding the re-employment restrictions.

NYCERS Response

NYCERS officials generally disagreed with the findings and the first recommendation in the report.  In doing so, NYCERS cited criteria for disability pensioners’ earning limitations different from the criteria relied on by the audit.  NYCERS officials contend the criteria they cited is applicable to the pensioners whose payments we question.  With regard to our second recommendation that NYCERS send a special notice of pertinent rules to it members, NYCERS stated that it does send such a special notice out and provided us with information detailing the steps that it had taken and will be taking to inform their members regarding the reemployment restrictions.

Auditors Response

While NYCERS’ relies on a December 2005 memorandum from the New York City Law Department to support its interpretation of applicable pension law as it relates to the payments questioned in this audit, the Comptroller’s Office disagrees with the City Law Department’s analysis for the reasons set forth in the written opinions of the Comptroller’s Office of the General Counsel dated June 27, 2005, and April 5, 2006.  We urge NYCERS to reconsider its position and practice based on the opinion provided by the Comptroller’s Office of the General Counsel.

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