REPORT BY THE NEW YORK COUNTY LAWYERS ASSOCIATION ON THE DEATH GAMBLE AND SECTION 60 OF THE NEW YORK RETIREMENT AND SOCIAL SECURITY LAW
This report was approved by the New York County Lawyers Association (NYCLA) Board of Directors at its regular meeting on June 8, 2015. 1
Judges do not often die in office. When they do, however, their families not only suffer the loss of a loved-one, but they also suffer significant financial loss due to an anomaly in Section 60 of New York’s Retirement and Social Security Law. In essence, for members of the judiciary, there is what many refer to as a “Death Gamble”– if a judge (and certain other New York State employees) dies while in office, his or her beneficiaries receive a more modest death benefit compared to the more substantial pension benefits that beneficiaries of a retired judge receive if the judge dies while retired. Additionally, the beneficiaries of a judge who dies in office may not elect any of the benefit options available to a judge who retires.2
You might ask, “Doesn’t this violate the Employee Retirement Income Security Act (ERISA)? Wasn’t ERISA adopted to do away with such unfair and Draconian rules?” Generally, the answer is “yes”; however, pension plans for state employees are not subject to the provisions of ERISA.
Prior to legislation enacted in 2000, the Death Gamble applied to thousands of police officers, firefighters and teachers in New York State, in addition to members of the judiciary and certain non-judicial personnel. As a result of very strong union advocacy representing New York State police officers, firefighters and teachers, the 2000 bill removed the gamble for police officers, firefighters and teachers who had served in their jobs for a minimum period of time. Unfortunately, members of the judiciary were specifically excluded from the 2000 legislation removing the Death Gamble.
In summary, the 2000 legislation modified state pension rules to provide that the beneficiaries of those police officers, firefighters and teachers eligible for Service Retirement at the time of their deaths now had the same benefit options available to them that the decedents would have had – the beneficiaries are eligible to receive a lump sum equal to the amount the decedent would have been entitled to receive had the decedent retired on the day before his or her death or, importantly, if chosen, a monthly retirement allowance.3
Thus, while the Death Gamble was eliminated for thousands of police officers, firefighters and teachers, nonetheless, judges and certain non-judicial employees continue to work under the specter of this unfair pension provision. For non-judicial personnel subject to the Death Gamble, this disparity has, to a great extent, been buffered by the proliferation of early retirement opportunities afforded to most public employees.4 This is especially so in recent years, as a result of initiatives in connection with judicial budget cutting efforts. Rather than having to remain in service for longer periods after they become eligible to retire in order to increase their pensions, most non-judicial employees of the Unified Court System have been able to retire early while adding significantly to their pension credit. By doing so, they have eliminated the need to take the Death Gamble on living long enough, while remaining in employment, to earn an adequate pension.5
Judges, however, have not been able to take advantage of these early retirement opportunities, as they have been excluded as a group from each of the relevant statutes and early retirement incentives. The result is that judges, many of whom become judges later in life, must continue in service at some risk to their families’ financial welfare. Without an early retirement incentive by which to augment their eventual pensions, they have no choice but to remain in service if they wish to earn additional retirement credit. Not only is this grossly unjust in and of itself, it is also unfair that judges, who are the cornerstone of our justice system, are excluded from the benefit options available to most other state employees. When judges continue to serve after the age of 60, they are further disadvantaged by a provision that results in a 4% reduction per year (up to 40%) in the amount of death benefit available if they die while still employed by the state. Thus, the beneficiaries of a judge who dies in office after the age of 70 may only receive a lump sum equal to 60% of three times the decedent’s average salary during her/his final three years in service. As time goes by, these unfair pension provisions may be yet additional disincentives for many to undertake judicial service, or to continue judicial service when they are at the height of their professional abilities.6
Although the Death Gamble has existed for a number of years, many in the organized bar are not aware of this unfair and Draconian structure. For more than a decade, Court administration has sought to persuade the legislature to correct this unfair and unjust situation by amending the relevant provisions of the Retirement and Social Security Law to permit state-paid judges and justices of the Unified Court System to elect to have their beneficiaries receive a pension in lieu of the comparatively modest death benefit, upon their death while in service. Judicial budget reductions, a long overdue judicial salary increase, as well as funding for civil legal services for poor people and for additional Family Court judges have, for good reason, dominated the Court Administrators’ attention. However, as a result, it has been very difficult to get traction in the legislature to correct the unfairness of the Death Gamble.
Several times in recent years the Office of Court Administration (OCA) has submitted proposed legislation to remove the Death Gamble for judges.7 According to the New York State Comptroller’s office, the cost to ameliorate this provision is relatively modest. In 2011, the most recent occasion that OCA submitted proposed legislation to correct this injustice, the Retirement Systems Actuary of the Office of the New York State Comptroller calculated that if such an amendment were adopted, “[i]t is estimated that there will be increases in the annual contributions of the State of New York of approximately $170,000 for the fiscal year ending March 31, 2012…” and that there would be a one-time payment of a “past service cost of approximately $3.3 million.”8 The calculations today would be very similar. These amounts reflect a tiny share of the current $1.8 billion court budget, yet the benefit to our dedicated judiciary’s families would be enormous. A copy of the 2011 proposed legislation is attached.
Section 50 of the Legislative Law requires that a “fiscal note” from the Office of the New York State Comptroller be appended to the proposed bill. Such a request was made by Marc Bloustein, OCA’s Legislative Counsel, in connection with the 2011 proposal for amendment to the Retirement and Social Security Law consistent with the terms outlined above. From time to time, private bills have been enacted which provide that a particular deceased judge is deemed to have retired before her/his death while still on the bench, thus providing the deceased judge’s beneficiaries with the benefit options that would have been available to the deceased judge had she/he retired rather than died while still in office.9 While this is a good precedent, in light of political vagaries, the complexities of the legislative process, uncertainty and delay for beneficiaries, this is not a reliable or desirable way to address this problem.10
Therefore, the NYCLA Board of Directors has adopted a resolution urging an amendment of §60 of New York’s Retirement and Social Security Law, to permit state-paid judges and justices of the Unified Court System to elect to have their beneficiaries receive a pension in lieu of the regular death benefit, upon their death while in service. Additionally, if a judge did not make the election prior to death, the designated beneficiary of the judge’s death benefit should be authorized to make the election for the deceased judge posthumously and to choose from the pension payment options contained in §90 of New York’s Retirement and Social Security Law.11
Respectfully submitted,
The New York County Lawyers Association Board of Directors
____________________________________