Question: I am nearing retirement and still don’t understand how the 50% pension is calculated. Basically I would like to know the difference between the three-year average and the final twelve months. Also what earnings are pensionable and what are not? — P.O. Charles DiTrani, PBSI

ANSWER: The following applies to all members hired between July 1, 1973 and July 1, 2000.

Members are eligible to receive what is called “a service retirement allowance” after the completion of 20 years of Allowable Police Service. The retirement allowance is 50% of the total pensionable compensation earned during the final 12 months immediately preceding your retirement date or the three-year average, whichever is greater. Pensionable compensation consists of wages, overtime, night-shift differential, worked vacation, holiday and portal-to-portal pay. The five- and ten-year longevity become pensionable at the completion of 20 years. The 15- and 20-year longevity become pensionable at the 25th year. The uniform allowance is not pensionable. It is important to remember that the compensation is credited the day it is earned, not when it is paid.

The last 12 months

Your last 12 months for pension purposes are your last 12 months on the active payroll, not the 12 months prior to the date you file for retirement at the Pension Fund. If your date of retirement is July 31, 2005, then your last 12 months is the period from August 1, 2004, through July 31, 2005. The amount earned during that period cannot be more than 20% above the amount earned during the preceding 12 months.

Example #1

This example compares two police officers that use the last 12-month period from August 1, 2004, thru July 31, 2005.

	Earnings 8/1/03 - 7/31/04	Earnings Limit	Earnings 8/1/04 - 7/31/05	Pensionable Earnings 8/1/04 - 7/31/05
P.O. "A"	$60,000	$72,000	$70,000	$70,000
P.O. "B"	$60,000	$72,000	$80,000	$72,000

The three-year average

The three-year average can be calculated two different ways. It is either the final 36 months immediately preceding your retirement date, or your best three consecutive calendar years. If you use the three consecutive calendar years, they can be any three consecutive years during your police career. They must, however, begin on a January 1st. Whether you use the last 36 months or three consecutive calendar years, no year can be more than 20% above the preceding two-year average.

Example #2

This example is of a police officer that uses calendar years 2002, 2003 and 2004.

Year	Actual Earnings	Earnings Limit	Pensionable Earnings
2000	$58,000	-	-
2001	$62,000	-	-
2002	$80,000	$72,000	$72,000
2003	$84,000	$85,200	$84,000
2004	$74,000	$98,400	$74,000

There are other factors that can raise or reduce your 50% pension. These include 60th value, prior pension credit, ITHP value and shortages in your pension account. These will be covered in a future article.

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.