CITY HALL -- Even though they are technically no longer city employees, some 37,288 retired New York City uniformed officers received a $12,000 check Dec. 15 known as a “Christmas bonus.”
In addition to their regular pension, eligible retirees annually receive the Variable Supplement Fund (VSF) payment -- or “Christmas bonus,” according to a report from the non partisan Citizens Budget Commission.
The CBC said police and fire retirees who do not receive disability pensions are eligible for the “Christmas bonus.”
“VSF payments are not only a benefit typically not available to retired officers in other jurisdictions, they also are a drain on the fiscal health of the pension funds,” CBC Vice President Maria Doulis said. “Police and fire personnel each have a separate pension fund; correction officers are part of a larger general city employee pension fund.”
The payment emerged from an agreement made between union and city leaders in 1968 at a time when the city was trying to increase its investment return of pension funds by diversifying portfolios.
As the city sought to diversity portfolios, union reps on the board of the police and fire pension funds agreed to allow investments in equities on the condition that “excess” earnings be used to give supplemental payment for retirees, the CBC said.
Supplemental benefits were “variable” each year and were determined by the strength of investment earnings. In some years, retirees got a check and in other years they did not.
But, in 1993 the set-up changed, and payments for police and fire retirees got converted to “guaranteed fixed payments” that would increase by $500 every year until 2007, when they reached $12,000.
In 2013, there were 41,603 VSF recipients, and the vast majority of those recipients were retired police, followed by firefighters.
That year, 28,773 retired police officers and superiors received VSF payments, so did 5,373 retired firefighters and officers, and 7,457 correction officers. And, transit and housing police do, too.
About one-third of all fire retirees receive a VSF payment, compared to 62 percent of police retirees.
In 2018, Correction’s Officers did not receive the payment, but in 2019 they will be again, the CBC said.
In fiscal 2018, 31,352 retired police officers and superiors received VSF payments, 5,010 retired firefighters and officers did too, and 926 transit and housing officers received the payment.
The CBC said fewer firefighters receive VSF payments because the city’s fire department is smaller and because the agency has a higher rate of disability pensions.
The CBC pointed out that, unlike “regular pension benefits,” VSF payments are not constitutionally protected.
Because the payment is not considered part of the pension system and is considered “separate fiduciary funds,” it can be “reduced, mitigated or eliminated by the state legislature,” the CBC said.
“Phasing out or eliminating the VSF should be part of the mayor and City Council’s agenda in Albany next year,” Doulis said. “Gradually eliminating these unusual pension bonuses for retirees would enhance the fiscal condition of the pension funds and reduce the needed contributions from taxpayers.”
Correction: This article was updated to reflect the number of VSF recipients in 2018.
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