Are FDNY & NYPD Pensions Equal?

The answer is no.  Many people incorrectly assume that FDNY and NYPD pension benefits are basically the same or equal.  Thomann Tax has analyzed and compared these two pension systems and has determined that the NYC Fire Pension Fund (Fire) provides significantly higher pension benefits regarding pension option costs.  The following is a basic example comparing an option #2 (100% to beneficiary) cost of a Fire pension member vs. a Police pension member using the same assumptions for both members:

Assumptions 

  • 50 year old member
  • 50 year old beneficiary
  • Appointment date of 7/1/1993
  • Maximum service pension (no option) of $80,000

Fire Pension vs. Police Pension Option #2 Cost

Item

Fire

Police

Annual pension (retiree)

$71,704

$68,144

Annual pension (beneficiary)

$71,704

$68,144

Option cost

$8,296

$11,856

Result

$3,560 (option cost is 43% more for Police)

Reviewing the costs of the other more common options gives the same unfavorable results:

  • Option 4-2 (100% to beneficiary with a pop-up)
    -Fire option cost is $8,776
    -Police option cost is $12,816
    $4,040 (option cost is 46% more for Police)
  • Option 3 (50% to beneficiary)
    -Fire option cost is $4,376
    -Police option cost is $6,400
    $2,024 (option cost is 46% more for Police)
  • Option 4-3 (50% to beneficiary with a pop-up)
    -Fire option cost is $4,640
    -Police option cost is $6,968
    $2,328 (option cost is 50% more for Police)

Active NYC Police Pension Fund members should be asking why they are not entitled to the more favorable pension option costs that Fire Pension Fund members have been receiving since March of 2001.

NYC Police Pension Funds members who retired and selected a pension option at finalization (or were forced to pick a pension option due to a divorce) may want to investigate ways to possibly correct this inequity.

Finally, if you really want to get fired up/annoyed, visit the NYS Retirement System Retirement Payment Options calculator  and compare option costs of NYS Police with NYC Fire/Police.  The pension option costs used by the NYS pension system are far superior to NYC pension systems.  Here is an example of the pension options for a NYS Police member using the same assumptions in the previous example.

3 replies
  1. Jim B
    Jim B says:

    Pete, based on your analysis of the cost of a Pension option, is evident that absent a terminal illness or other underlying issue (divorce) why would any retiring member of the NYPD chose an option at retirement? Don’t quote me, but for probably half the cost of an option, a 50 year old in good health would do much better with an insurance policy.

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