Your last day on duty and your retirement date are different days, and terminal leave is the gap between them. This lesson covers why that gap matters and the choice to take it as cash.
The short answer. After your last day on active duty you use your accrued time, then your terminal leave, and you stay on the active payroll until it runs out. Your retirement date comes after that. The VSF and the banked VSF are paid around December 15 of your retirement year only if you retire before December 1; retire in December and the banked VSF waits until the following December. Union contracts from 2015 to 2017 let you take terminal leave as a one-time lump sum instead. Ask the Fund for your retirement date both ways.
The full walk-through, with every quote, is in our post NYPD Terminal Leave and the December 1 VSF Cutoff.
The booklets say you can take all your accrued time and terminal leave after your last day on active duty, that accrued time has to be used before terminal leave starts, and that “During terminal leave, members remain on the active payroll” (Tier 2 booklet, June 2026, p.16; Tier 3, p.13). The property receipt your command signs, PD 520-013, records the day your terminal leave starts (Tier 2, p.15).
So the more leave you take as time off, the later your retirement date can fall. Your timekeeper has your balance, and the Fund’s filing instructions ask you to get it first.
“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)” (Tier 2, p.20; Tier 3, p.20). If you retire in December, the Tier 2 booklet says you get no prorated VSF for the month and an eligible banked VSF “will not be paid until December of the following year” (p.20). A few months of terminal leave can be the difference.
Which December it lands in also decides which tax year it counts in, so take both dates to your tax professional. Lesson 10 covers the VSF itself.
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The union agreements of 2015 to 2017 added the choice of a one-time lump sum in place of terminal leave, paid as soon as practicable after you retire: from March 15, 2017 for the PBA, May 1, 2015 for the SBA, and February 1, 2015 for the DEA, the CEA and the superior officers’ coalition. For lieutenants the option rests on the coalition agreement, which made it conditional for each union, so confirm it with payroll.
The buyout is money the NYPD owes you, not a pension payment; the Fund’s retirement information booklet sends questions about it to the NYPD Payroll Section. What each choice does to your pension, the booklets don’t say. Ask the Fund before you choose.
Your terminal leave decision goes on the first form you send when you file. Our post How to File for NYPD Retirement has the steps.
Sources: NYC Police Pension Fund, Tier 2 Summary Plan Description, June 2026, pp.15, 16, 19 and 20; NYC Police Pension Fund, Tier 3 Summary Plan Description, June 2026, pp.12, 13 and 20; NYC Police Pension Fund, Instructions for Making an Appointment to File for Retirement (Service, Tier 2); NYC Office of Labor Relations: PBA 2012-2017 Memorandum of Agreement, Section 8, and the 2015 SBA, DEA, CEA and coalition agreements; NYC Police Pension Fund, Additional Retirement Information Booklet (version updated April 5, 2023).
This lesson is general, not a recommendation for your own case. If you roll money into an IRA that we manage, we are paid on it. If it stays where it is, we are not. Confirm every figure and date with the New York City Police Pension Fund before acting.