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November 27, 2023

Determining if a lump sum payment to a member of a New York State public retirement system is includable in calculating a member of the retirement system's final average salary

Petitioner was employed as a police officer for the Village pursuant to a series of collective bargaining agreements [CBA] and employment contracts negotiated by the Police Benevolent Association [PBA] from 1989 until his retirement on March 30, 2019, when he began to collect his pension.

In April 5, 2021, Petitioner received a final determination by New York State and Local Employees Retirement System advising him that three $25,000 lump sum payments (totaling $75,000) that he received on March 1 of each year from 2017 through 2019 were not includable in his final average salary for purposes of calculating his pension benefits.* 

This resulted in a recalculation of and reduction in Petitioner's pension benefits and a directive that the overpayments be recouped from his pension payments.

Following a hearing, a Hearing Officer agreed that the lump sum payments had been properly excluded from the calculation of Petitioner's final average salary. The Comptroller adopted the Hearing Officer's decision.

Petitioner then commenced this proceeding pursuant to CPLR Article 78 challenging the Comptroller's determination.

Citing Matter of Bohlen v DiNapoli, 34 NY3d 434, the Appellate Division explained the "Comptroller is vested with exclusive authority to determine applications for retirement benefits and such determination, if supported by substantial evidence, must be upheld". Further, opined the Appellate Division, "where substantial evidence exists to support the [Comptroller's] determination, a court may not substitute its judgment for that of the agency, even if there is evidence supporting a contrary conclusion".

Petitioner bears the burden of establishing his entitlement to the inclusion of the lump sum payments in the calculation of his final average salary, said the Appellate Division, and this he failed to do. 

"Consistent with the provisions of the Retirement and Social Security Law, a member's retirement benefit is based upon his or her final average salary, i.e., 'the average salary earned by such ... member during any three consecutive years which provide the highest average salary' ".**

Noting that a court "need not defer to the Comptroller's interpretation of the statutory exclusion for lump sum 'credits for time not worked' [the court said it was] in agreement with the Comptroller's determination as applied to the facts of this matter."

*This Retirement System determination was based upon its finding that the lump sum payments made pursuant to an October 17, 2017 memorandum of agreement between the Village and the PBA was not for "time worked" and, as such, were not pensionable.

** Annual compensation is defined as "(t)he salary or wages annually earnable by a member" (see Retirement and Social Security Law §302(2)(a).

Click HERE to access the Appellate Division's full decision posted on the Internet. 

 

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