Section 217(b) of the General Municipal Law is where the vesting requirement for a NY State LOSAP is found. It states:
A participant shall have a nonforfeitable right to a percentage of a service award that is not less
than the percentage determined under the following table:
Years of Nonforfeitable Firefighting Service: Less than 5, Percentage= 0
Years of Nonforfeitable Firefighting Service: 5 or More, Percentage= 100
Notwithstanding the preceding table, a participant shall have a one hundred percent nonforfeitable right to his service award upon his attainment of the entitlement age under the program [emphasis added]. Each sponsor may establish a percentage table that provides for a faster rate of becoming nonforfeitable. Any amounts attributable to forfeiture of a participant’s service award shall be used to reduce contributions for other service award program participants and shall not in any case be used to increase benefits for other participants. The preceding shall not preclude amendment of a service award program to provide for an increase in benefits.
We dealt with the entire concept in a previous blog post, which you can read HERE.
The purpose of this post is to expand on the part in italics above: Notwithstanding the preceding table, a participant shall have a one hundred percent nonforfeitable right to his service award upon his attainment of the entitlement age under the program.
Essentially when a participant attains the entitlement age, he/she becomes 100% vested. The person does not need to earn five (5) years of service credit to be 100% vested and therefore collect a benefit. This quirk has been in the LOSAP statute since it was originally written. This is something we get frequent complaints about, and we agree it is time for the law to be amended to close this loophole. . The purpose for this is not clear, though the best guess is likely that the law was written with the understanding that a volunteer would “retire” at the entitlement age and no longer be able to participants.
A LOSAP sponsor could attempt to be creative and define the entitlement age to be an “age plus service” requirement. For example, the entitlement age is the later of age 60 or the age a participant earns five (5) years of service credit. Unfortunately, we do not believe this is allowed either given the definition of entitlement age in the law, which is: “…the age designated by the sponsor at which a program participant is entitled to begin receiving an unreduced service award. In no event shall the entitlement age under a program be earlier than age fifty-five nor later than the age at which the participant can receive an unreduced benefit under Title II of the Social Security Act (Public Law 74-271 U.S.C. 306 et seq.).”
As you can see, the statute defines the entitlement age to be “the age”, which would seem to eliminate the possibility of making it an “age plus service” requirement. Furthermore, the statute states that in no event shall it be later than Social Security normal retirement age. At the time this blog post was written, the latest Social Security normal retirement age is age 70, which means an entitlement age cannot be later than age 70. If a LOSAP sponsor was comfortable defining the entitlement age as an “age plus service” requirement, it would appear the entitlement age could still not be any later than age 70 even with a five-year service requirement.
If your LOSAP is still requiring all participants to earn five (5) years of service credit before becoming 100% vested, review this blog post with your attorney.