ANSWER:To best answer your questions, I should first explain just what ITHP is. Upon entering the NYPD, each member is assigned a pension contribution rate based on his or her age when appointed. The younger one is when hired, the higher the contribution rate. The rates range from 5.05 to 8.65 percent.

Over the years, the city has agreed to pay a portion of your pension contributions, effectively increasing the amount of money you get in your check. They call this payment by the city Increased Take-Home Pay or ITHP. Without ITHP the member would be required to contribute the entire rate.

In the 1960's the first ITHP was set at 2.5%, reducing the amount a member had to contribute by that percentage. A law the PBA succeeded in getting passed in the year 2000 increased the ITHP by 2.5%, bringing the total to 5%. Therefore, a member's required contributions are now their assigned rate minus the 5% the city pays.

For example, if an officer's assigned rate is 7.50% and the city is assuming 5% of that amount, the officer will be contributing only 2.5% into his pension. This is the amount (plus interest) used when determining a member's pension account after 20 years of service.

At retirement, if your pension account holds more than your required amount, you have an excess, which can increase your pension or, preferably, provide you with a larger final withdrawal. If you fall short of your required amount, either by taking pension loans or choosing not to pay pension contributions, you will have a shortage, which will decrease your annual pension. Contributing the additional ITHP will reduce this shortage.

This now brings us to the popular question, "What is the ITHP waiver and how does it affect me?"

By choosing the waiver you agree to pay your total assigned contribution rate. This does not save the city anything since it is still mandated to pay 5% into your ITHP account.

In the previous example of the officer who had an assigned rate of 7.50%, if he or she signed the ITHP waiver, the officer would be paying the full 7.50%, 5% more than the member would be required to pay.

Why would a member want to contribute the extra 5%? Because the officer would be investing that amount (tax deferred) into his or her pension account and be receiving a guaranteed 8.25% interest. Also, the 8.25% is not subject to state or city taxes.

However, one should only take advantage of this if one can afford to do so. If, for example, a member is paying 16% to a charge card company, then the officer should use the ITHP to help pay off the high interest debt.

Now to answer your questions. At retirement you will receive 100% of your ITHP contributions plus the 8.25% interest they earned. If they are excess contributions above your required amount, you can either receive a check for them or have their actuarial value added to your pension for life. If you have a shortage, 100% of these extra contributions, plus interest, will be applied to reduce your shortage.