Public Employee Press

Political Action 2005
New law: pay back loan, pension pops up

Thousands of retirees can boost their pensions by paying off loans from their retirement systems under a new law backed by DC 37 and its Retirees Association.

Perhaps tens of thousands of retirees now receive reduced pension checks because they borrowed against their pension while they were employed by the city and failed to pay back the money before retiring. The new law, signed Aug. 16 by Gov. George E. Pataki, will let retirees get their full pension once they cover their loan.

“Countless retirees have a reduced pension even though the reduction has long ago covered the value of the loan they took out while they were working,” said Retirees Association President Stuart Leibowitz. “This tremendous victory corrects a longstanding injustice. Until now, retirees didn’t have the same right as active employees, who can avoid a permanent reduction in their pension if they pay off a loan.”

200,000 covered
The law affects the more than 200,000 retirees in the New York City and Dept. of Education retirement systems. The union has started working with the retirement systems to ensure that the new law is implemented as soon as possible, Leibowitz said.

“When we were working, we were told that for only a few pennies off your pension dollar, you could take a loan from the pension system and earn more by investing it yourself,” said Leibowitz. “Many people didn’t realize that you could take a big hit over the long term because the permanent reduction in your pension could cost you more than the loan.” For example, Leibowitz pointed out that a retiree who had taken out a $30,000 loan would lose $2,700 a year forever.

Leibowitz praised DC 37 Political Action Director Wanda Williams and her staff “for everything they did to help get this legislation enacted.” The pension “pop-up” legislation was among a number of pension bills that DC 37 pushed during this year’s legislative session. Another DC 37-supported bill approved by the governor will allow pension system members to file retirement forms electronically.

“Several of the bills that we worked for either never made it to the governor’s desk or were vetoed,” said DC 37 Pension Committee Chair James Tucciarelli, who is president of Sewage Treatment Workers and Senior STWs Local 1320.

Tucciarelli urged members with specific pension concerns to voice their concerns at the union’s annual Legislative Conference on Saturday, Oct. 22.

— Gregory N. Heires