NYPD Terminal Leave and the December 1 VSF Cutoff
Your retirement date, not your last day on duty, decides which December the banked VSF arrives

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Your last day on duty isn’t your retirement date

Two dates matter when you leave, and they’re easy to mix up. The first is your last day on active duty. The second is your retirement date, which the Fund sets when it processes your retirement (Tier 2 booklet, June 2026, p.16).

In between come your accrued time and your terminal leave. The Tier 2 booklet says you can take all of it after your last day on active duty, that all accrued time has to be used before terminal leave starts, and that “During terminal leave, members remain on the active payroll” (p.16). The Tier 3 booklet says the same (p.13). So the more time off you still have to use, the further your retirement date can sit from your last day on duty.

You’ll see this on paper. The property receipt your command signs when you leave, PD 520-013, has a field called “Next Scheduled Tour After Leaves, Except Terminal Leave,” and the booklet says “The date in this field is the starting date of terminal leave” (Tier 2, p.15). The Fund’s own filing instructions tell members to get their leave balance from their timekeeper first, to answer one question: “Do I need to use Terminal Leave (or other leave) to get me to my retirement date?”

The December 1 line

If you retire for service, the Variable Supplements Fund pays $12,000 a year on top of the pension. It’s paid once a year, and in your first year “The VSF is prorated based upon the number of full months of retirement in the retirement year” (Tier 2 booklet, p.19). Vested and disability retirees don’t get it.

If you stay past your 20th anniversary, you also build the VSF DROP, which the booklets also call the “Banked Variable”: a lump sum for each year you remain in active service past your 20th anniversary (Tier 2, p.20). By law it equals the VSF payments you’d have received between the date you were first eligible for service retirement and the date you actually retire (NYC Administrative Code section 13-271(e)). It isn’t paid if you die in active service, and the Tier 2 booklet adds that it isn’t paid on a disability retirement.

Then the timing. Both booklets print the same sentence: “VSF payments and VSF DROP payments will be made or credited on or about December 15th of the retirement year (for members who retire prior to December 1).” The Tier 2 booklet goes on: “Members who retire in the month of December are not eligible for a prorated VSF for the month; however, if the member is eligible for the VSF DROP, it will not be paid until December of the following year” (p.20). The Tier 3 booklet says the same about the DROP (p.20).

Put the two together. Say your last day on duty falls in the fall and you still have months of terminal leave to use. Taken as time off, that leave keeps you on the payroll and can carry your retirement date past December 1. If it does, a banked VSF you could have had this December arrives the next December instead.

Which December it’s paid in also decides which tax year it counts in. That’s a conversation for your tax professional once you know both possible dates. The booklets also say accrued VSF DROP money is eligible for rollover, subject to IRS rules (Tier 2, p.20), and the papers the Fund sends you when you file include a “Rollover Election for Banked Variable.”

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Taking terminal leave as a lump sum

You don’t have to take terminal leave as time off. The union agreements of 2015 to 2017 added the choice of a one-time lump sum in place of the leave, paid as soon as practicable after retirement. The start dates differ: March 15, 2017 in the PBA’s agreement, May 1, 2015 in the SBA’s, and February 1, 2015 in the DEA’s, the CEA’s and the superior officers’ coalition agreement. Taking the leave as time is still allowed. For lieutenants the option rests on the coalition agreement, which made it conditional for each union, so confirm it with payroll.

The booklets describe the same choice from the Fund’s side. Tier 2 members can take their leave “or request a lump sum payment for such time” (p.16), and the Tier 3 booklet says members can request a lump sum for terminal leave time not used (p.13).

The buyout is money the NYPD owes you, not a pension payment. The Fund’s Additional Retirement Information Booklet lists “terminal leave buyout” under unpaid money from active service and tells you to “Contact the NYPD Payroll Section” with questions about it.

What each choice does to your pension is a separate question, and neither booklet answers it. Ask the Fund before you choose, and get the answer for your own dates.

What to ask before you file

The first form you send when you file, the Fund’s My Retirement Preferences Form, asks for your retirement date and “Your decision on using Terminal Leave” (see How to File for NYPD Retirement). So this choice comes early. Before you send it:

• Ask your timekeeper for your accrued time and terminal leave balance.
• Ask the Fund what your retirement date would be with the leave taken as time, and with it taken as a lump sum.
• For each date, ask when your VSF and any banked VSF would be paid, and whether the choice changes your pension.
• Take both dates to your tax professional, since the payments can land in different tax years.

Common questions

When is the NYPD VSF paid?

On or about December 15. In your retirement year it’s paid that December if you retire before December 1, prorated by the full months you’re retired that year (Tier 2 booklet, pp.19-20).

What is the banked VSF?

The VSF DROP, a lump sum for each year you stay in active service past your 20th anniversary and then retire for service. It’s paid on or about December 15 of your retirement year if you retire before December 1, and the following December if you retire in December.

Do I get terminal leave on a vested retirement?

No. The Tier 2 booklet says vested retirees are not entitled to terminal leave before separation from service (p.18).

Does taking the lump sum change my pension?

The booklets don’t say. Ask the Fund for your pension figure both ways before you decide.

Who do I ask about the terminal leave lump sum?

The Fund’s retirement information booklet sends questions about a terminal leave buyout to the NYPD Payroll Section.

Retiring from the FDNY? Firefighters are in a separate pension fund. Run the FDNY pension calculator or get the free FDNY Pension Book.

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