Contract — Terminal Leave Questions and AnswersJanuary 27, 2015
TO: All DEA Members
FROM: Michael J. Palladino, President
SUBJECT: Terminal Leave Questions and Answers
The current contract proposal contains a Terminal Leave Lump-Sum option which permits members, who would generally waive their accrued terminal leave, to collect their earned terminal leave in a lump sum while preserving their overtime earned over the last 12 months to maximize their pension calculation.
For the past 12 years, the Police and Fire Unions have attempted to secure this benefit legislatively in Albany, however, because of the bill’s high cost factor and opposition from the City of New York, the legislation has repeatedly been vetoed by numerous sitting Governors.
Since most of our members overwhelmingly choose to waive their terminal leave and give it back to the City, the cost to purchase the benefit on our own would be much higher and cost-prohibitive. However, as a result of our participation in the Uniformed Supervisory Coalition, we were able to secure this benefit at a significantly reduced cost.
The following are some answers to the most frequently asked questions about the Terminal Leave Lump Sum Option.
1. The Terminal Leave Lump Sum option does not end when this contract expires and, like all contractual benefits, it cannot be removed unless the membership votes in a subsequent contract to sell the benefit.
2. The Terminal Leave Lump Sum can be rolled over in full or in part to a 457 or 401K plan to defer taxation. If a member elects not to defer any or all of the lump sum, then normal taxation will apply like any other paycheck.
3. Members who choose to utilize their three-year average salary pension calculation instead of their last 12 months (final average salary) can either run their terminal leave or take the Lump Sum Option. As a reminder, members who were appointed to the NYPD after July 1st, 2000 do not have the option to have their pensions based on a three-year average salary calculation. Pension calculations for those members are based only on their last 12 months of service (final average salary). As a result, the Terminal Leave Lump Sum Option is just as valuable for younger members as it is for veteran members.
4. Members who elect to take their terminal leave in a lump sum payment are exempt from the 10% early retirement penalty usually associated with distributions/withdrawals from either the DEA Annuity Fund or the Police Pension Fund.
5. The Terminal Leave Lump Sum option increases with every contractual raise, because it is calculated on your base salary.
6. Members should be receiving contract ballots shortly. Please take the time to read the contract information that will be enclosed with your ballot and vote. If you have any questions, please call your DEA Borough representatives or call the DEA office and ask to speak with a Board Officer. Ballots must be received by Election Services Solutions by Friday, February 13th, 2015 when they will be counted commencing at 10:00 a.m.