I was recently told by a senior member of my command that I should take a pension loan even if I don't need the money. The reason, he said, was that the Pension Fund charges only 4% interest and that the 4% goes back into my own account, costing me no interest at all. Is he correct? — P.O. Anthony Coppola, 105 Pct.

This inaccurate story has been making the rounds for a long time. I first heard it in the early 1970's, from the 88 Pct.’s so-called pension expert. (Every precinct has always had its own pension expert.) However, in this case the local pension expert is wrong for the following reasons:

When you borrow from your pension account the Fund does charge you 4% interest, which does go back into your pension account. The problem is, if you didn’t borrow the money, the city would be paying your account 8 1/4% interest. So borrowing costs you 4% from your own pocket — plus the additional 4 1/4% that the city would have paid. The total cost to the member is 8 1/4%. So you should only borrow from your pension if it is going to cost you more than 8 1/4 % to borrow from another source.

Here are a few examples of when you should or should not take a pension loan.

• You’re considering buying a new car and the auto dealership is offering 2% financing. In this case you should obviously finance through the dealer, paying the 2% while leaving your pension money to receive 8 1/4% from the city.

• You’re having major work done on your home and debating whether to pay for it on your charge card or by taking out a pension loan. The current interest being charged by the credit card company is 15%. In this situation you should pay for the work with a pension loan, losing the 8 1/4% interest from the city but saving the 15% from the charge card.

• You have an outstanding pension loan of $10,000 plus $10,000 in the bank, which is earning 2% interest. You should withdraw the money from the bank and pay off the pension loan. You should do this even if you can pay off only part of the pension loan. You will then be earning 81/4% on the pension account while losing only the lower interest rate from the bank.

When taking out pension loans you should always read carefully the loan form instructions and follow those instructions to make sure the loan is not subject to unnecessary taxes. If you do take a taxable loan, you will pay federal taxes only. However, if you are younger than 59 years and six months, you will pay an additional 10% tax penalty on the loan. Remember, your pension account is your money. Be smart with it.

Is it true that if I have a heart problem after I retire but before my pension is finalized that I can still file for a disability retirement under the heart bill? — P.O. Tim Mante, 46 Pct.

The answer is definitely no. You must submit disability applications for the heart bill, or any other disability, while on the active payroll. This includes time spent while on terminal leave. If you have not submitted an application by the time you go off the payroll, it is too late under the law to file. This is the reason I recommend that all members have a complete medical exam, including a thallium stress test, before retiring. A thallium stress test will help detect any heart blockages the member may have. Many members over the years thought they were in good health but discovered otherwise through this exam. Those members then filed a disability application while on the active payroll and were ultimately granted much higher pensions under the heart bill. More importantly, they found that they had a problem and began taking better care of themselves. Remember, living longer is the ultimate key to our pension system.

Any member who wishes to file a disability pension application should contact Angelo Grande at the Medical Division. Mr. Grande, a retired PBA delegate, is an expert on the disability process and an employee of the PBA.

PBA Pension Consultant Joseph Maccone will answer your retirement and pension questions in print. Write or email at the PBA, 40 Fulton St., NY, NY 10038, or jmaccone@nycpba.org.