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February 23, 2009

Retiring at 40-something

Police officers in most New York municipalities can retire at half pay after only 20 years in the job. In New York City, which has the largest "20 and out" plan, the pension system "is collapsing under the weight of payments it makes to more than 10,000 retired cops--all under the age of 50."

As the New York Post reports, these young retirees "represent a staggering 25 percent of the city's police-pension liability - which is expected to help push the total bill for retirees to $7.8 billion in four years, almost six times the amount paid in 1997."

"Right now, we are paying full retirement benefits to people in their 40s," Mayor Bloomberg cautioned. "As people are living longer, we simply can't afford to do it forever."
Elsewhere in New York, most police officers--including state troopers and county police on Long Island--belong to the Police and Fire Retirement System (PFRS). According to the system's Comprehensive Annual Financial Plan (CAFR), the vast majority of the 15,486 currently active uniformed members are in "20 and out" plans, which have no minimum retirement age and which require no employee contribution (p. 132).

The CAFR indicates that 2,156 police and fire pensioners in the state--nearly 8 percent of all PFRS retirees--are below the age of 50 (p.. 133). We don't know how much of the total pension benefit bill they account for. However, we do know that PFRS members who retired in 2008 had an average pension of $61,755 (p. 135). This was 52 percent higher than the average pension for cops and firefighters who retired in 1998.

While the Post report included life expectancy data indicating that the average male city cop retiring at 42 can expect to live to 80, while a firefighter the same age can expect to reach 81. While no such data are available for other cops and firefighters in the state, there would appear to be little reason to believe their life expectancies are much different.

The Post story does not take account of another key cost for the retirees -- health benefits. Cops and firefighters throughout the state, like most other public-sector retirees from civilian occupations, can remain in the municipal or state health insurance program after retirement; in NYC's case, they don't even have to pay a share of the premiums.

Posted by Lise Bang-Jensen

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