A savings bank inquired whether Section 250(5) of the Banking Law requires its trustees to determine whether a supplemental benefit should be paid for any given year in the year in question or whether the trustees may adopt an automatic plan for supplemental benefits, the amount of which would be determined on the basis of the applicable cost-of-living index as provided in subdivision 5, without the necessity of making a specific determination for each year for which benefits are to be supplemented.

The Department responded that the statute does not require a bank's trustees to make an annual decision as to whether the supplemental benefit should be paid for the year in question. The words “each calendar year” appearing in the first sentence of the subdivision are intended to describe the supplement as an annual payment, the maximum amount of which is to be determined on the basis of the cost-of-living index figure for the year in question. The words do not qualify the manner in which the trustees must act in order to authorize the supplement. The grammatical sense of the language is that (i) the trustees may, in their discretion, determine to supplement any retirement benefit payable by a savings bank and (ii) such supplement may be made “each calendar year”, measured on the basis of the cost-of-living index for each year. This interpretation is confirmed by the parallel language contained in subdivisions 1, 2 and 3 of Section 250, where reference to “each year of service” or similar language describes the benefits to be paid rather than the manner in which the trustees must act.

Any interpretation of the subdivision which conditioned the supplemental benefits upon an annual decision would make it impossible to fund the benefits. By its nature, a funded program requires a continuing plan whose future costs can be estimated and provided for on a current basis.

Requiring a new decision to be made each year and thereby precluding the use of a funded program would contravene the intent of subdivision 5, which was to permit pension benefits to be supplemented through funding. Subdivision 5 provides for a supplement to any retirement benefit payable “in accordance with the preceding subdivisions of this section”. Subdivision 3 expressly authorizes funded benefits, consequently, the supplements contemplated by subdivision 5 include those provided in connection with funded plans. An interpretation which made it difficult either as a matter of law or as a practical matter, to fund these benefits would contravene the intent of the Legislature.

DATED: October 20, 1976