Section 13-335. Payments to variable supplements funds

a. For the purposes
  of this section, the following terms shall mean and include:
    1. "Base fiscal year". Any fiscal year of the  city  beginning  on  or
  after  July  first,  nineteen  hundred sixty-nine, with respect to which
  fiscal year a computation of  earnings  differential,  based  on  equity
  investments made or held by the pension fund during such fiscal year, is
  being made pursuant to this section.
    2.  "Current fiscal year". The fiscal year of the city next succeeding
  the base fiscal year.
    3. "Prior base fiscal year". Any fiscal year of the city which  begins
  on  or  after July first, nineteen hundred sixty-nine and which precedes
  the base fiscal year.
    4."Earnings differential". The amount  (expressed  as  a  positive  or
  negative quantity) by which the equity experience factor (expressed as a
  positive  or  negative  quantity)  with  respect to the base fiscal year
  differs from the interest comparison factor with  respect  to  the  base
  fiscal  year.  If  such  equity  experience  factor is greater than such
  interest comparison factor, the difference  between  the  two  shall  be
  expressed  as a positive quantity. If such interest comparison factor is
  greater than such equity experience factor, the difference  between  the
  two shall be expressed as a negative quantity.
    5.  (a) "Equity experience factor". An amount (expressed as a positive
  or negative quantity) equal to (i) the income earned by the pension fund
  during the base fiscal year from its investments in equities, plus  (ii)
  the  capital gains, realized or unrealized, occurring during such fiscal
  year by reason of such  investments,  less  (iii)  the  capital  losses,
  realized  or  unrealized, occurring during such fiscal year by reason of
  such investments.
    (b) In the event that any equity is sold during the base fiscal  year,
  the  expense  of  such  sale,  including  but  not  limited  to broker's
  commissions, shall be deducted from capital gain  or  added  to  capital
  loss,  in  determining  whether  such  sale produced a capital gain or a
  capital loss and the amount thereof.
    6. "Income". Any yield of  equities,  including  but  not  limited  to
  dividends, other than capital gains.
    7.  "Hypothetical fixed income securities earnings". (a) The aggregate
  of the hypothetical interest yields computed pursuant  to  subparagraphs
  (b), (c) and (d) of this paragraph seven.
    (b)  The  board  shall compute with respect to each investment made or
  maintained by the pension fund in an equity during the base fiscal year,
  the amount of interest  which  would  have  been  hypothetically  earned
  during  such fiscal year, under the methods of calculation prescribed in
  this subparagraph seven, if an  amount  equal  to  such  investment  had
  instead been hypothetically invested in fixed income securities and such
  securities  had  been held by such fund for a period (in the base fiscal
  year) co-extensive with the period during which such equity was held  by
  such fund in the base fiscal year.
    (c)  For  the  purposes  of  this  section,  the  amount  of  any such
  investment in an equity during the base fiscal year shall be  deemed  to
  be:
    (i) the market value of the equity on the first day of the base fiscal
  year,  in the case of any such equity acquired by the pension fund prior
  to the commencement of such fiscal year and held by  such  fund  on  the
  first day of such fiscal year; and
    (ii)  the  total  amount  paid  by  such  fund  to acquire the equity,
  including but not limited to broker's commissions and other expenses  of
  such  acquisition,  in  the case of any such equity which is acquired by
  such fund during the base fiscal year.

    (d) For the purposes of this section, the  amount  of  interest  which
  would  have  been  earned by the pension fund on such hypothetical fixed
  income securities during the base fiscal year shall be deemed to be  the
  amount obtained:
    (i)  by  multiplying  the  amount  of  the  investment in such equity,
  determined as prescribed by subparagraph (c) of this paragraph seven, by
  the assumed rate of interest for the base fiscal year; and
    (ii) by prorating the interest so computed,  in  any  case  where  the
  investment  in such equity was maintained by the pension fund for a part
  of the base fiscal year.
    8. "Assumed rate of interest". (a) In  relation  to  any  base  fiscal
  year,  a  hypothetical  rate  of  interest, fixed as hereinafter in this
  paragraph eight prescribed, which shall  be  used  for  the  purpose  of
  computing, pursuant to paragraph seven of this subdivision a, amounts of
  interest  which  would  have  been hypothetically earned on hypothetical
  investments of the pension fund in fixed income securities  during  such
  fiscal year.
    (b)  The  board shall fix the assumed rate of interest with respect to
  each base fiscal year. In the event of a tie vote with  respect  to  the
  fixation  of  such rate, it shall be fixed by the arbitrator designated,
  for the purpose of resolving  disputes,  in  the  collective  bargaining
  agreement   then   in   effect   between  the  city  and  the  uniformed
  firefighters' association of greater New York.  If  such  arbitrator  is
  unable  or  unwilling to serve, or if there be no such agreement then in
  effect, such rate shall be fixed by  an  arbitrator  designated  by  the
  board.  If  there  is  a  tie  vote  as  to  the  designation of such an
  arbitrator, such rate shall be fixed by an arbitrator appointed  by  the
  supreme  court,  on the application of any member of the board. The cost
  of  any  arbitration  pursuant  to  the  foregoing  provisions  of  this
  subparagraph (b) shall be paid from transferable earnings.
    9.  "Six  per  cent  interest  offset". In relation to any base fiscal
  year, the excess, if any, of the hypothetical  fixed  income  securities
  earnings  with respect to such year, over the amount which such earnings
  would be if they had been computed on the basis of an interest  rate  of
  six  per cent, rather than on the basis of the assumed rate of interest;
  provided, however, that there shall be no six per cent  interest  offset
  with  respect  to  any  base  fiscal  year unless the hypothetical fixed
  income securities earnings with respect to such fiscal year exceeds  the
  equity  experience factor with respect to such fiscal year; and provided
  further that no six percent interest offset with  respect  to  any  base
  fiscal year shall in any event exceed the amount obtained by subtracting
  the  equity  experience factor with respect to such fiscal year from the
  hypothetical fixed income  securities  earnings  with  respect  to  such
  fiscal year.
    10. "Interest comparison factor". In relation to any base fiscal year,
  the  amount obtained by subtracting the six per cent interest offset, if
  any, with respect to such  fiscal  year,  from  the  hypothetical  fixed
  income securities earnings with respect to such fiscal year.
    11.  "Cumulative  earnings  differential for the base fiscal year". In
  relation to a base fiscal year, the amount (expressed as a  positive  or
  negative  quantity)  obtained by adding to the earnings differential for
  such base fiscal year, the total of all earnings differentials  for  all
  prior base fiscal years.
    12.  "Transferable  earnings".  In relation to a base fiscal year, the
  total amount required by the provisions of subdivision c of this section
  to be distributed, with respect to such base fiscal year, in the  manner
  provided by subdivision d of this section.

    13.  "Cumulative distributions of transferable earnings for prior base
  fiscal years". In relation to a base  fiscal  year,  the  total  of  all
  payments  of  transferable  earnings  made or required to be made by the
  pension fund to the firefighters' variable supplements fund and the fire
  officers variable supplements fund with respect to all prior base fiscal
  years pursuant to subdivisions c and d of this section.
    14.  "Firefighters'  variable  supplements  fund".  The  firefighters'
  variable  supplements  fund  established  by  subchapter  five  of  this
  chapter.
    15.  "Fire  officers'  variable  supplements fund". The fire officers'
  variable supplements fund established by subchapter six of this chapter.
    16.  "Firefighters".  (a)  All  firefighters  and   (b)   all   wipers
  (uniformed)  who  are  members  of  the  fire  department  pension  fund
  subchapter two.
    17. "Fire officers". (a) All members of the  uniformed  force  of  the
  fire department holding the rank of lieutenant or any position of higher
  rank  in  such force and (b) all pilots, marine engineers (uniformed) or
  assistant marine engineers (uniformed) who are members of the  New  York
  fire department pension fund subchapter two.
    b.  As  soon  as practicable after the close of each base fiscal year,
  but not later than August thirty-first of the current fiscal  year,  the
  board shall compute:
    (1)  the  earnings differential with respect to such base fiscal year,
  and the interest offset, if any, with respect to such base fiscal year;
    (2) the total contributions made to the pension  fund  subchapter  two
  with respect to such base fiscal year on behalf of all personnel who are
  firefighters, as of the last day of such base fiscal year; and
    (3)  the  total  contributions made to the pension fund subchapter two
  with respect to such base fiscal year on behalf of all personnel who are
  fire officers, as of such last day.
    c. If the cumulative earnings differential for the base fiscal year is
  a  positive  quantity  and  exceeds  the  cumulative  distributions   of
  transferable  earnings  for  prior base fiscal years, a sum equal to the
  amount of such excess shall be distributed by the pension  fund  in  the
  manner provided by subdivision d of this section.
    d.  (1)  If  there  be  transferable earnings with respect to the base
  fiscal  year,  computed  as  hereinabove  provided,  such   transferable
  earnings shall be divided into a firefighters' variable supplements fund
  share  and a fire officers' variable supplements fund share in the ratio
  that the total contributions made to the  pension  fund  subchapter  two
  with respect to such base fiscal year on behalf of firefighters bears to
  the  total  contributions  made  to the pension fund subchapter two with
  respect to such base fiscal year on behalf of fire officers, as computed
  for such base fiscal year pursuant to the provisions of  paragraphs  two
  and three of subdivision b of this section.
    (2)  On or before August thirty-first, of the current fiscal year, the
  pension  fund  shall  pay  from  the  contingent  reserve  fund  to  the
  firefighters'  variable supplements fund and the fire officers' variable
  supplements fund their respective shares of such  transferable  earnings
  with  respect  to  the  base  fiscal  year,  as such shares are computed
  pursuant to paragraph one of this subdivision d.
    e. The comptroller shall furnish to the  board  such  information  and
  data as it may request for the purpose of carrying out the provisions of
  this section.
    f.  The firefighters' variable supplements fund and the fire officers'
  variable supplements fund shall not have any rights under  this  section
  to  any  payments by the pension fund to such variable supplements funds
  derived from or based upon the investment earnings of the  pension  fund

  in  any  fiscal  year  of  the  city  commencing on or after July first,
  nineteen hundred eighty-eight. Any and all rights of  the  firefighters'
  variable supplements fund to payments from the pension fund derived from
  or  based upon the investment earnings of the pension fund in any fiscal
  year of the city commencing  on  or  after  such  July  first  shall  be
  governed   solely   by  the  provisions  of  section  13-335.1  of  this
  subchapter.  Any  and  all  rights  of  the  fire   officers'   variable
  supplements fund to payments from the pension fund derived from or based
  upon  the  investment earnings of the pension fund in any fiscal year of
  the city included in the period commencing on such July first and ending
  on June thirtieth, nineteen hundred ninety-two shall be governed  solely
  by  the  provisions  of section 13-335.2 of this subchapter. Any and all
  rights of the fire officers' variable supplements fund to payments  from
  the  pension  fund derived from or based upon the investment earnings of
  the pension fund in any fiscal year of the city commencing on  or  after
  July  first, nineteen hundred ninety-two shall be governed solely by the
  provisions of section 13-335.3 of this subchapter. Any and all rights of
  the wiper variable supplements  assets  account  to  payments  from  the
  pension  fund  derived from or based upon the investment earnings of the
  pension fund in any fiscal year of  the  city  included  in  the  period
  commencing  July  first,  nineteen  hundred eighty-eight and ending June
  thirtieth, nineteen hundred ninety-two shall be governed solely  by  the
  provisions of section 13-391.1 of this chapter.