PENSION ENHANCEMENT:

Recently enacted legislation provides additional service retirement credit for eligible members of Tier 1 and Tier 2 and also reduces the contribution requirements for eligible members of Tier 3 and Tier 4.

The Pension Enhancement Law is effective October 1, 2000 for members not represented by a collective bargaining unit. For members represented by a collective bargaining unit, the law will apply following a resolution of the NYCERS Board of Trustees and will be retroactive to October 1, 2000.

Members elgible for the Transit 20-Year Plan (Tiers 1 & 2) and the Transit 25/55 Plan (Tier 4) are not covered.

ADDITIONAL SERVICE CREDIT

Tier 1 and Tier 2 members who are in active service between June 1, 2000 and October 1, 2000, inclusive, are eligible to receive one month's additional credit, to a maximum of 24 months, for each year of membership service.

Active service means: service while being paid on the payroll; on leave of absence with pay; on other approved leave without pay not to exceed twelve weeks.

Additional credit applies to service rendered as of the date of retirement, vesting, transfer or death and is available for all purposes, including qualifying service.

If you are a Tier 2 member subject to a maximum retirement benefit (60/50/40 limits), your additional service will not be subject to those limits. Your additional benefit will be computed by the following formula:

Pensionable salary base
X Years of additional service credited
X Benefit fraction of plan you retire under.

REDUCTION IN CONTRIBUTION RATE:

Beginning October 1, 2000, Tier 3 and Tier 4 members will not be required to make Basic Tier 3 or Tier 4 required contributions (3% of wages) to NYCERS after the 10th anniversary of their NYCERS membership date, or the completion of ten years of Credited Service, whichever is earlier. If you apply to buy back time to reach your ten years of Credited Service, NYCERS will cancel your 3% contribution rate as soon as the buyback cost is paid.

Credited Service includes purchased service once you have completed 5 years of membership service.

Please Note:

If you are in any of the special Tier 4 plans that require Additional Member Contributions above the Basic Tier 4 rate, you will continue to make those contributions.

You will not receive a refund of contributions you made prior to the date you become eligible for cancellation of the Basic 3% rate, even if you have more than ten years of Credited Service or membership.

If you have an outstanding loan or you are buying back prior membership service, you must repay those amounts.

New legislation signed July 11, 2000 provides a permanent Cost of Living Adjustment (COLA) for NYCERS retirees and beneficiaries. Here's how it works:

COLA becomes payable to retirees who have:

• reached their 62nd birthday and been retired for five years, or
• reached their 55th birthday and been retired for ten years, or
• retired for disability at any age and been retired for five years.

• Also covered are recipients of an accidental death benefit who have been receiving that benefit for five years.

• The COLA payable September 2000 will apply to retirees and beneficiaries who received benefits on or before September 30, 1995.

NYCERS will calculate COLA based on:

• Your maximum retirement allowance, whether or not that is the option you picked.
• COLA will be applied to the first $18,000 of maximum annual retirement benefit only.

The COLA percentage for September 2000 is based on a one-time catch-up formula. See COLA Catch-Up table below for details.

The COLA percentage in each year beginning 2001 will be:

• not less than one percent, and not more than three percent in any year
• 50 percent of annual inflation [as measured by the Consumer Price Index for the one year period ending March 31 prior to the September of the COLA payment]
• effective September 1 of each year, beginning September 2001.
• The new COLA provided by this legislation is payable in lieu of any previous COLA, unless the earlier COLA pays a greater benefit.

Note on Surviving Spouses:

The surviving spouse of a deceased retiree who receives a benefit under a joint-and-survivor option will be elgible to receive a COLA:

• equal to 50 percent of the amount the retiree would have received, if alive, and
• payable on September 1, 2000 or the month following the retiree's death, whichever is later.

A Designated Annuitant surviving spouse who is receiving benefits due to a death prior to January 1, 1980 will be entitled to a supplemental allowance:

• equal to $200 per month,
• beginning July 2000.

Note on Variable Supplement Fund (VSF) Payments:

For retirees who are eligible to receive payment from a VSF and who are also eligible to receive a COLA under any legislation enacted on or after January 1, 1992:

VSF payments for any calendar year will be reduced by any COLA that is payable.

NYCERS will mail a COLA announcement to every pensioner by September 21, 2000 announcing how the COLA law will affect them.