Discontinuing a disability retirement allowance
Inquiry from a reader
From time to time a reader will submit a question to the editor of NYPPL. One query recently submitted concerned the authority of the New York State Employees’ Retirement System to discontinue an individual’s disability retirement allowance once such an allowance has been approved for the individual by the System.
The controlling laws, rules and regulations for both the New York Employees’ Retirement System and the New York State Policemen's and Firemen's Retirement System provide for the discontinuation of an individual’s disability retirement allowance under certain circumstances.
With respect to the New York Employees’ Retirement System, subdivision a of §102 of the Retirement and Social Security Law provides, in relevant part, as follows:
Subdivision a. Once each year following the retirement of a member on a disability allowance, the comptroller may, and, upon the beneficiary's application, shall require such disability beneficiary to undergo a medical examination.
If the individual refuses to submit to a medical examination required by the Comptroller, the pension portion of the individual’s retirement allowance, including the “pension-providing-for-increased-take-home-pay,” is to be discontinued. Should the individual continuously refuse to submit to such a medical examination for twelve months, the individual forfeits his or her pension benefit.
It should be noted that case law suggests that once a pension benefit is forfeited it cannot be reinstated even if the individual subsequently satisfies the condition or requirement that resulted in such forfeiture.
Further, subdivision b of §102 provides, in relevant part, that “The pension, including the pension-providing-for-increased-take- home-pay, of a disability beneficiary shall be reduced in the event that any such disability beneficiary is engaged in a gainful occupation paying more than the difference between his [or her] retirement allowance, as it would be without optional modification and if not reduced by the actuarial equivalent of any outstanding loan and if not increased by the actuarial equivalent of any additional contributions, and his [or her] final salary.” The adjustment is made so that the individual’s annuity and the amount so earnable by the individual is equal the individual’s final salary. If the individual’s earning capacity thereafter changes, the amount of the pension payable may be further adjusted.
In addition, subdivision c of §102, in pertinent part, provides that “In the event that the comptroller shall determine that a disability beneficiary is able to engage in a gainful occupation,” if the individual “so requires” the Comptroller is to certify the name of the individual to the State Civil Service Department or appropriate municipal civil service commission.
The State Civil Service Department or such municipal commission is to then place the individual’s name, “as a preferred eligible,” on the appropriate eligible lists prepared by it for positions for which such individual is qualified and at a salary grade not exceeding that from which he or she was last retired. Adjustments to the individual’s pension benefit will be made so that his or her total compensation shall not exceed his or her final salary. Further, the individual is not eligible for membership in the retirement system as long as he or she receives any pension, including the pension providing for increased take home pay.
Finally, in the event that a “disability beneficiary” is restored to active service of an employer at a salary equal to or in excess of his or her final salary, his or her retirement allowance is discontinued in its entirety [see RSSL §102.d].
With respect to members of the New York State Policemen's and Firemen's Retirement System receiving disability retirement benefits, §402 of the Retirement and Social Security Law tracks the provisions of §102 of the Retirement and Social Security Law including a provision providing that “… a retiree of any New York state police or fire retirement system on a disability allowance who returns to gainful employment as an elected public official shall continue to receive the full amount of his or her retirement allowance, including the pension-providing-for-increased-take-home-pay” [See RSSL §402.f-1].
The requirements of these several provisions of law are reflected in Parts 336 and 337 of the Rules of the State Comptroller [2 NYCRR 336 and 2 NYCRR 337] and these Parts are set out below:
PART 336. DISABILITY RETIREMENT FOR MEMBERS OF THE NEW YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM UNDER ARTICLE 14 OF THE RETIREMENT AND SOCIAL SECURITY LAW
[Current through February 28, 2011]
Section 336.5. Recovery of disability beneficiaries.
(a) The Comptroller may, once each year following the retirement of a member on a disability allowance, and upon the beneficiary's application shall, require such disability beneficiary to undergo a medical examination. No such examination may be required until one year following the final determination granting disability retirement. Such examination shall be made at a place mutually agreed upon by the Comptroller and such beneficiary. In the event that any such disability beneficiary shall refuse to submit to a medical examination, the retirement allowance shall be discontinued until the member submits to a medical examination. If such refusal shall continue for one year, all pension rights shall be forfeited.
(b) Following such examination, or examinations, the Comptroller shall render a determination based upon the report of the medical board. Where the Comptroller determines that a beneficiary who has retired from a competitive class position is no longer incapacitated for the performance of gainful employment, the Comptroller shall certify to the applicable civil service department or commission, that the beneficiary is a preferred eligible to be placed upon the appropriate eligible list or lists, if any. Disability payments shall continue until such time as the beneficiary is first offered a position in public service at a salary grade equal to or exceeding that of the position from which the beneficiary had retired.
(c) In the event that a beneficiary had not retired from a competitive class position, or in the event that there exists no eligible list which encompasses the competitive class position from which he or she had retired, disability payments shall cease one calendar year from the date of the Comptroller's redetermination, and the beneficiary shall, if he or she had been vested at the time of retirement, be restored to membership in the New York State Employee's Retirement System.
2 NYCRR 336.6 provides as follows:
(a) The retirement allowance of a disability beneficiary shall be reduced in the event that any such disability beneficiary is employed in an occupation paying more than the difference between his retirement allowance, as it would be without optional modification, and the final salary. The retirement allowance shall be adjusted to a sum which, when added to the amount so earnable, shall equal the final salary. If the earnings subsequently change, the retirement allowance shall be adjusted so that the sum of retirement allowance when added to the amounts earned shall not exceed his final salary. The reduction shall be from the amount that the allowance would have been without optional modification. The retirement allowance of a disability beneficiary shall not be reduced after he or she has attained the applicable mandatory retirement age, or shall have attained the age and the date such beneficiary would have been eligible for service retirement under applicable law had he or she remained in continuous service from the date of retirement. For the purposes of this section, applicable law shall mean the plan and/or provision under which the member was enrolled on the date the disability retirement became effective.
(b) In the event that a disability beneficiary is restored to active service of an employer, at a salary equal to or in excess of his final salary, his retirement allowance shall cease. Thereafter, such person shall contribute to the retirement system in the same manner and at the same rate that he paid prior to his disability retirement. The total service which was credited at the time of such retirement shall be credited to the restored individual. Upon subsequent retirement, additional service earned by him subsequent to his last restoration to membership will be credited.
(c) In the event that a disability beneficiary is restored to active public service at a salary less than his final salary but equal to or in excess of the current minimum salary for the position from which he was last retired for disability, such person, if he or she so elects, shall again become a member of the retirement system and the retirement allowance shall cease. If such an election is filed with the Comptroller, such individual shall contribute to the retirement system in the same manner and at the same rate as was paid prior to disability retirement. The total service which was credited at the time of such retirement shall be credited to the restored individual. Upon his subsequent retirement, additional service earned subsequent to the last restoration to membership will be credited.
PART 337. DISABILITY RETIREMENT FOR MEMBERS OF THE NEW YORK STATE AND LOCAL EMPLOYEES' RETIREMENT SYSTEM UNDER ARTICLE 15 OF THE RETIREMENT AND SOCIAL SECURITY LAW
[Current through February 28, 2011]
Section 337.5. Recovery of disability beneficiaries.
(a) The Comptroller may, once each year following the retirement of a member on a disability allowance, and upon the beneficiary's application shall require such disability beneficiary to undergo a medical examination. No examination upon a beneficiary's application may be required until one year following the final determination granting disability retirement. Such examination shall be made at a place mutually agreed upon by the Comptroller and such beneficiary. In the event that any such disability beneficiary shall refuse to submit to a medical examination, the retirement allowance shall be discontinued until the member submits to a medical examination. If such refusal shall continue for one year, all pension rights shall be forfeited. The following indicia of a disability beneficiary's ability to return to the duties of the position from which such individual retired on account of disability, and any other reasonable indicia, shall be considered in determining whether it is appropriate to require the medical examination of a disability beneficiary (who has not requested such medical examination) for the purposes of this Part:
(1) medical evidence or records submitted to the Retirement System that indicates that the disability beneficiary may be able to perform the duties of the former position;
(2) videotape, photographs or other documentation or evidence submitted to the Retirement System which indicates that the disability beneficiary may be able to perform the duties of the former position;
(3) a determination by the Social Security Agency, Workers' Compensation Board or similar entity which indicates that the disability beneficiary may be able to perform the duties of the former position;
(4) documentation with respect to the disability beneficiary's earnings in a position or positions which may reasonably be construed as indicating that the disability beneficiary may be able to perform the duties of the former position.
(b) Following such examination, or examinations, the Comptroller shall render a determination based upon the report of the medical board. Where the Comptroller determines that a beneficiary who had retired from a competitive class position is no longer incapacitated for the performance of gainful employment, the Comptroller shall certify to the applicable civil service department or commission, that the beneficiary is a preferred eligible to be placed upon the appropriate eligible list or lists, if any exist. Disability payments shall continue until such time as the beneficiary is first offered a position in public service at a salary grade equal to or exceeding that of the position from which the beneficiary had retired.
(c) In the event that a beneficiary had not retired from a competitive class position, or in the event that there exists no eligible list which encompasses the competitive class position from which he or she had retired, disability payments shall cease one calendar year from the date of the Comptroller's redetermination, and the beneficiary shall, if he or she had been vested at the time of retirement, be restored to membership in the New York State Employees' Retirement System.
Section 337.6 provides as follows:
(a) The retirement allowance of a disability beneficiary shall be reduced in the event that any such disability beneficiary is employed in an occupation paying more than the difference between his retirement allowance, as it would be without optional modification, and the final salary. The retirement allowance shall be adjusted to a sum which, when added to the amount so earnable, shall equal the final salary. If the earnings subsequently change, the retirement allowance shall be adjusted so that the sum of retirement allowance when added to the amounts earned shall not exceed his final salary. The reduction shall be from the amount that the allowance would have been without optional modification. The retirement allowance of a disability beneficiary shall not be reduced after he or she has attained the applicable mandatory retirement age, or shall have attained the age and the date such beneficiary would have been eligible for service retirement under applicable law had he or she remained in continuous service from the date of retirement. For the purposes of this section, applicable law shall mean the plan and/or provision under which the member was enrolled on the date the disability retirement became effective.
(b) In the event that a disability beneficiary is restored to active service of an employer, at a salary equal to or in excess of his final salary, his retirement allowance shall cease. Thereafter, such person shall contribute to the retirement system in the same manner as and at the same rate that he paid prior to his disability retirement. The total service which was credited at the time of such retirement shall be credited to the restored individual. Upon subsequent retirement, additional service earned by him subsequent to his last restoration to membership will be credited.
(c) In the event that a disability beneficiary is restored to active public service at a salary less than his final salary but equal to or in excess of the current minimum salary for the position from which he was last retired for disability, such person, if he or she so elects, shall again become a member of the retirement system and the retirement allowance shall cease. If such an election is filed with the Comptroller, such individual shall contribute to the retirement system in the same manner and at the same rate as was paid prior to disability retirement. The total service which was credited at the time of such retirement shall be credited to the restored individual. Upon subsequent retirement, additional service earned subsequent to the last restoration to membership will be credited.