My Tier 3 colleagues, Will you leave at 20?
vote(s)
Post Reply| 20 and out |
|
77.5% | |
| Staying past 20 |
|
22.5% |
Are you guys going to take advantage of the new (old) 20 year retirement? For me, 25 was a viable option when we had to stay 22 anyway, but now Im taking my chances somewhere else a little bit sooner. The new pension enhancement for 25,30,35 years is a little confusing, when I do the math it comes out to about 8,000 extra per year for staying 25 as a Sgt. Its peanuts, in my opinion.
Also, majority will stay the 3 years for escalation. So the real question is 23 or 25. (Unless you have another career lined up then 20 and out).
I dont think its top pay SDS/LCD plus 5/10/15%, its 5/10/15% of whatever top pay SDS/LCD is at that time will be added to your pension. Just for arguments sake, if youre a Lt and staying 25 years, lets say a top pay LCD gets 180k base. Youd get a 5% bonus of $180k, or an additional $9,000 annually added to your pension.
While having the option to leave with 50% FAS vs 42% FAS at 20 years is definitely good, there are still some significant problems existing with the tier 3 pension:
1) No ITHP
2) No additional 50%
3) Social security offset at age 62, regardless of whether or not the MOS even claims SS at that age
4) No escalation/inflation protection on the 50% FAS pension at 20 years
If we do some basic back of the napkin math here, lets use an example of an MOS who joins at age 22 and retires at age 42 with a $100,000 pension. The day this MOS retires, inflation will begin to peck away at the value of his pension, and since he left prior to securing escalation, we can devalue his pension over a 20-year period with an assumption: Let's use a 3% rate of inflation annually from age 42 to 62. At age 62, the pension has become worth approximately $55,000.
Now, let's estimate the social security benefit at age 62 for an MOS who worked for 20 years and retired. I will use my social security benefit as an example, I retired right around 20 years and my benefit at age 62 (early claiming and applying a 3% COLA) is approximately $44,000 per year. So the offset in this particular case would be a reduction in the pension benefit of $22,000. [SS payments edited to account for COLA increases until age 62]
$55,000 - $22,000 = $33,000 ($2,750 per month) pension at age 62. It doesn't end there. Inflation continues to erode the value of the pension until this individual is in the grave.
Now, on the other hand, let's say this MOS works for 25 years and has full escalation protection on his $100,000 pension. This essentially means that even at age 62, the $100,000 pension has kept up with inflation and was not eroded in value like the first case, being devalued to approximately $55,000. So we still get the social security offset, but it's much more manageable now, reducing our $100,000 pension to approximately $78,000 per year ($6,500 per month - more than 2x the first pension). The benefits don't end there, they continue in reverse as compared to the first pension; while the first pension continues to get devalued over time to inflation, this second pension continues to increase with inflation because of the protection a lifetime escalation benefit affords the MOS.
A lot of tier 3 guys are going to have to ask themselves just how badly they want to run out the door at 20 now, and understand exactly what they'll be forfeiting for the luxury of leaving at 20.... And let me tell you, it is a luxury!
-- Edited by SturdyHairBag on Saturday 10th of May 2025 12:52:31 AM
-- Edited by SturdyHairBag on Saturday 31st of May 2025 11:29:17 PM
I see what youre saying, its only an added benefit but using your example it would be $4,500 more to pension not $9,000. The 5/10/15% is added to top pay and then the 50% pension is applied.
An example showing this was written into bill.
"For example, a Detective who retires with 32 years of uniformed NYPD service would receive an increase in their annual pension of approximately $7,476 (a 50% annual benefit of 10% multiplied by the highest-grade detective pay of $149,518)."
Sounds much less appealing.
The escalation isnt a guarantee its voted on every 2-3 years and they can vote to take it away.
This to me is what the 457 and 401k are for; supplementing your pension when you do reach SS age. Sure, you can give up 5 years in your 40s to secure a better pension in your 60s, but if you have been contributing to your deffered comp and let it sit for 2 decades you should be good to go. I mean you SHOULD have millions in it by that point.
I would rather have my 5 years of freedom with relative youth, but thats just me. I am in a good spot as well and am still planning to run out the door. Plus, as you can see from this discussion, no one actually knows what this pension enhancement thing is or how its calculated. Things like this make me want to just take my money and gtfo, fuck hoping it works out a certain way, fuck calling the union and having some random blowjob swear up and down this is definitely how it is.
-- Edited by fiftyfouredp on Saturday 10th of May 2025 02:23:41 PM
-- Edited by fiftyfouredp on Saturday 10th of May 2025 02:44:07 PM
All valid points on staying for 25, but my rational:
1. Have hit deferred comp hard since day 1. I plan on using my deferred comp to
Maintain the spending value of my pension. Ive been close to or have maxed it out every year. Ill have a nice amount when its done (get out of the pre fixed funds!)
2. Bought my house with 5.5 on. Throwing extra money at the principle every month. Goal is to have it close to, if not totally paid off at 20. Once the house is paid off my biggest expense is done
3. Dont plan on starting a 40 hour a week security job the week after I retire but Ill do something part time and have some money coming in. An extra 5 years in my 40s of nights, last minute details, working holidays, etc. just doesnt do it for me.
To each their own
What is the point of all that money in your 60s and 70s? Ive learned to live within my means. People have different priorities..some need that 100k car every 3 years. To me, being able to attend every family gathering, every practice, every school play is way more important than what my pension looks like in my old age.
But thats just me, and Im sure many will do 25.
You now have to change your moniker to 20 and out
Amen to that ! Well said
COLA and escalation are the same thing?
No its not fixed
Easy cowboy. I took a look at the Tier 3 pension pdf and it says full escalation at 25 year anniversary, with partial starting at 22 anniversary. Very doubtful this has changed with the 20 year option back.
Saw this as well. Escalation is build from years 22 to 25. For every month you stay after 22 you earn 1/36th escalation. Im still confused about COLA. Do we have to earn it, or is it not even available to tier 3?
COLA is only for ordinary and accidental retirement for tier 3. Plus it only applies for the first 18k
As stated above COLA was for Tier 2 and Tier 3 ODR and ADR. A normal Tier 3 person qualifies for Escalation, which takes 3 full years to get the full amount. I think it safe to say that once they update that file, it will say years 20-23.
Half tier 3 don't even know about the offset. Hands down the worst part of tier 3.
It does suck not having ITHP and 50/50. But you know what, cant miss what you never had. When you see your pension get lowered at an age when you dont wanna work anymore. Thats a major kick in the dick. Something you earned is lowered by something you paid into your entire life. How does it make sense.
-- Edited by Tier3scum on Monday 12th of May 2025 09:15:13 PM
Agreed. That 8.25% interest for ITHP and 50/50 is great but tier 3 guys can put more in 457/401 to try and match that. The offset is actual money that will come out of tier 3 pockets.
-- Edited by Testtakertastetester on Monday 12th of May 2025 09:25:21 PM
Hopefully this PC and upper execs on this job all leave sooner than later. But if youre tier 3 and were gonna leave at 22 and now are staying over 30 for this little percentage raise. Please let me know so I can personally drive you to lefrak to make sure youre ok
-- Edited by Tier3scum on Tuesday 13th of May 2025 02:16:19 PM
Tier 3 gets 1/60th?
Id say if youve been crushing the 457 and 401k best you can, then 20 and out. Otherwise, consider staying 25.
Exactly ^
Yea but 5% for 5 extra years. Thats like 10k a year if you are making 200k. For 5 years that aint worth it to me.
I'm pretty certain cola is written in our agreement to be up 3 percent, not actually or guaranteed 3%. So it can change yearly based on what the city feels like paying. Does anyone know the % they paid the last 10 year's?
-- Edited by DeptIsaJoke on Wednesday 14th of May 2025 01:49:04 PM
It turns out to be couple hundred bucks a year
You're confusing COLA and escalation. Escalation is based off the CPI and maxes out at 3% on the entire pension. Issue is that escalation has never been officially calculated yet since no one is eligible for it for a few more years. It can be 0% but should average 2-2.5% a year. You get the full amount at 25 years. It ends up being a lot of money in the long run, 20-25 years down the road the pension can potentially double. It could also go up only 50%. It's impossible to know. We get COLA at 20. But its just a few hundred dollars a year.
-- Edited by Jets5646 on Wednesday 14th of May 2025 02:34:12 PM
www.nyc.gov/assets/nycppf/downloads/pdf/Tier%203%20SPD%2020241029.pdf
It hasn't been updated yet to reflect the 20 year retirement but this is from the Pension Fund so it's as official as it gets.
See d(1)-(3) for language on the 5%/10%/15%
Looks like it bumps salary then you calculate FAS.
For PO's they get two of three years calculated as top pay 3rd grade detective. If that was the case, then it would def be worth staying to 25.