Provides up to three years of service credit to members of public retirement systems of the state for military service rendered during times of peace; removes requirement that such military service occur during specified periods of hostilities; requires such members have at least five years of credited service, not including military service.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A4313A REVISED MEMO 05/11/2015
SPONSOR: Paulin (MS) TITLE OF BILL: An act to amend the retirement and social security
law, in relation to providing credit to members of public retirement
systems of the state for military service
PURPOSE OR GENERAL IDEA OF BILL:
To extend the Military Service Credit Law of 2000 to all veterans who
have served in the military
SUMMARY OF SPECIFIC PROVISIONS:
Section one provides that this act shall be known as the "Veterans'
Equality Act."
Section two amends section 1000 of the retirement and social security
law, as added by chapter 548 of the laws of 2000 and subdivision 9 as
added by chapter 547 of the laws of 2002, by deleting the specified
periods of time in which military service would had to have been
rendered in order to receive up to three years of service credit. Such
specified periods currently prevent a person who served in the military,
outside such periods, from obtaining service credit when applying to a
public retirement system of the state. This section also deletes other
restricting dates.
Section three provides that section 25 of the retirement and social
security law shall not apply to this act.
Section four provides the effective date.
JUSTIFICATION:
The goal of this bill is simple: to honor those who have bravely served
our country and to encourage them to return to New York and continue
their public service as teachers, firefighters, police officers, munici-
pal and state employees. After five years of service to New York, these
men and women would become eligible to buy additional pension credit.
This is a small price to pay to recognize the training and leadership
skills that our veterans received during their honorable military
service.
I. New York's military service credit law leads to arbitrary and incon-
sistent results.
Under the existing law, whether or not a veteran is eligible for the
military service credit program depends entirely upon when and where he
or she served, leading to arbitrary and inconsistent results.
A. Limiting service credit to specific dates of war leaves out veterans
who performed the same duties at other times.
Currently, military service credit is available to anyone who served
during World War II (12/7/1941 to 12/31/1946), the Korean War (6/27/1950
to 1/31/1955) and the War in Vietnam (2/28/1961 to 5/7/1975). While all
of these periods of conflict did involve massive amounts of troops in
combat, 30% of troops during the Vietnam Era served outside of Vietnam
and the surrounding Southeast Asian theater*. It makes little sense that
the approximately three million troops that served outside of the Viet-
nam region during that era are eligible for this pension credit when men
and women who are currently in the line of fire are not eligible. All
veterans, regardless of when they served should have the same pension
opportunities as those that served in these eras.
B. Limiting service credit to those who received an expeditionary medal
discriminates against women veterans.
Those who received an expeditionary medal for service in the military
conflicts in Lebanon (6/1/1983 to 12/1/1987), Grenada (10/23/1983 to
11/21/1983), and Panama (12/20/1989 to 1/31/1990) are also eligible to
purchase pension credit. Because the expeditionary medal is awarded for
participation in a military conflict, women who served during these
conflicts were not awarded the medal since they were not eligible for
deployment into the theater of operations at that time. The women who
served during these conflicts are unfairly excluded from buying back
military service credit, simply because they were not permitted to be
deployed.
A 1994 Pentagon ruling permitted women to serve in the theater of combat
to assist with contingency operations, but prohibited them from serving
in direct combat roles including serving in the infantry.** Therefore,
men and women who served in the theater of operations in Iraq, Kuwait,
Saudi Arabia, Bahrain, Qatar, the Persian Gulf and the Red Sea since
August 2, 1990 are eligible to buy back military service credit. In
2013, the Pentagon lifted the ban on women serving in direct combat
roles and more positions are now available for women.*** However, since
it is still uncommon for women to serve in combat roles, they are
disproportionately excluded from buying back military service credit
when eligibility for the credit is based on combat service.
C. Limiting service credit to service in a specific country or conflict
leaves out veterans who served in active combat or performed critical
operations in other locations.
*See National Vietnam Veterans Foundation Statistics
http://www.nationalvietnamveteransfoundation.orgistatistics.htm
** See New York Times "Pentagon Is Set to Lift Combat Ban for Women."
January 3, 2013.
http://www.nytimes.com/2013/01/24/us/pentagon-says-it-is-lifting-
banon-women-in-combat.html.?pagewanted=all& r+0.
***Id.
Many veterans who served in active combat are ineligible for the mili-
tary service credit. Troops that have participated in active combat in
Somalia, Bosnia, Haiti, Kosovo, Afghanistan, Pakistan, and the Korean
DMZ are not eligible for the military service credit. There should be
no distinction between service in one of these operations or one of the
many other operations that are currently eligible for the military
service credit.
Additionally, military personnel aiding in any of these operations from
other locations, such as Israel, Turkey, and Germany are also ineligible
to access this credit buyback. Further, the veterans who served around
the world in dangerous situations during the Cold War are also excluded.
All of these troops have played and continue to play a critical role in
our nation's defense and should be permitted to buy back the military
service credit.
II. The New York State pension system is one of the least generous to
veterans.
The New York State pension system is one of only six state pension
systems to limit credit based on dates and/or combat service. States
that allow for the purchasing of credit based on any military service
include Arizona, California, Illinois, Massachusetts, New Jersey, Ohio,
Pennsylvania, Texas and Virginia and encompass nine of the ten largest
cities in the country. Currently, New York has one of the least compre-
hensive military service credit programs in the nation when considering
who is eligible and the number of years available for purchase. By
comparison, New Jersey**** allows any veteran to buy up to ten years of
service credit and California***** allows four; the current structure
under our laws is one of the least veteran friendly in the nation. The
great State of New York should be a leader in supporting our returning
veterans and passage of this bill will be a positive step in making this
a reality.
III. It is impossible to accurately determine the cost of this bill.
Although the Governor's veto message (Veto 484 of 2014) indicates that
this bill would cost local governments an estimated $57 million per year
in near-term obligations, it is impossible to accurately determine the
cost of this bill.
In fact, the fiscal notes produced by the New York State and Local
Retirement System (ERS), and New York State Teachers' Retirement System
(NYSTRS) state that it is impossible to determine the number of individ-
uals impacted by this bill as there are no records of the number of
veterans who are members of these retirement systems. Additionally,
even if there was a record of the total number of veterans, it would not
indicate how many additional veterans would be covered by this expansion
nor would it be possible to predict the number of veterans who would opt
to buy pension credit. Such a record would also include veterans who are
not yet vested in the retirement system. Due to the cost to purchase
credits, it is unlikely that these veterans would buy back credit until
they are fully vested and closer to retirement.
The New York City Retirement Systems (NYCRS) fiscal note also acknowl-
edges that it is impossible to determine the exact number of individuals
impacted by this bill. However, the Office of the Actuary did estimate
the number of veterans in the NYCRS who could, potentially become eligi-
ble for the military service credit pursuant to this legislation by
using publicly available census data. Under this estimate, if every
veteran were to purchase the full three years of service credit, it
would cost New York City approximately $15.7 million annually, which is
less than two tenths of one percent more than the approximately $9
billion that New York City currently contributes to the NYCRS annually.
**** See The New Jersey Division of Pension and Benefits
http://www.state.nj.us/treasury/pensions/pdf/factsheets/fact01.pdf
*****See CalPERS "A Guide to Your Ca1PERS Service Credit Purchase
Options"http://www.calpers.ca.gov/eip-docs/about/pubs/member/ guidecal-
pers-service-credit-options.pdf.
PRIOR LEGISLATIVE HISTORY:
A.6974-B, 2014 veto 484 and 2013 referred to government employees. Same
as S. 7839, 2014 veto 484. A.8067-B, 2011 referred to governmental oper-
ations and 2012 held for consideration in ways and means. Same as
S.6904-A, 2012 referred to civil service and pensions. A.6663-A, 2010
referred to ways and means. Same as S.4316-A, 2010 referred to civil
service and pensions. A.6663, 2009 referred to governmental employees.
Same as S.4316, 2009 referred to civil service and pensions. A.6318-C,
2007 referred to governmental employees and 2008 passed Assembly. Same
as S.5495, 2007 and 2008 referred to civil service and pensions.
FISCAL IMPLICATION:
See fiscal notes included at the end of the bill.
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
4313--A
2015-2016 Regular Sessions
IN ASSEMBLY
January 30, 2015
___________
Introduced by M. of A. PAULIN, ABBATE, COLTON, BROOK-KRASNY, ZEBROWSKI,
GOLDFEDER, SANTABARBARA, ABINANTI, BARRETT, BENEDETTO, CAHILL, CLARK,
DINOWITZ, FAHY, GANTT, GUNTHER, HEVESI, JAFFEE, MAGNARELLI, MARKEY,
MAYER, ORTIZ, OTIS, PICHARDO, QUART, RAMOS, ROBERTS, ROSENTHAL,
RUSSELL, RYAN, SCHIMEL, SCHIMMINGER, SEPULVEDA, SIMANOWITZ, SIMOTAS,
SKOUFIS, STECK, STIRPE, THIELE, TITUS, WEPRIN, BORELLI, CURRAN, GRAF,
KATZ, LUPINACCI, MALLIOTAKIS, NOJAY, SALADINO, STEC, TEDISCO, TENNEY,
ROZIC, KAMINSKY, DiPIETRO -- Multi-Sponsored by -- M. of A. ARROYO,
BARCLAY, BLANKENBUSH, BRINDISI, BUCHWALD, BUTLER, CERETTO, CROUCH,
CUSICK, DAVILA, DenDEKKER, DUPREY, FARRELL, FITZPATRICK, GARBARINO,
GIGLIO, GOTTFRIED, HAWLEY, HOOPER, KEARNS, LALOR, LENTOL, LIFTON,
LUPARDO, MAGEE, McDONOUGH, McLAUGHLIN, MILLER, MONTESANO, OAKS,
PALMESANO, PERRY, RA, RAIA, RIVERA, RODRIGUEZ, SIMON, SKARTADOS,
SOLAGES, TITONE, WRIGHT -- read once and referred to the Committee on
Governmental Employees -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
AN ACT to amend the retirement and social security law, in relation to
providing credit to members of public retirement systems of the state
for military service
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "Veterans' Equality Act".
3 § 2. Section 1000 of the retirement and social security law, as added
4 by chapter 548 of the laws of 2000, subdivision 9 as added by chapter
5 547 of the laws of 2002 and subdivision 10 as added by chapter 18 of the
6 laws of 2012, is amended to read as follows:
7 § 1000. Military service credit. Notwithstanding any law to the
8 contrary, a member of a public retirement system of the state, as
9 defined in subdivision twenty-three of section five hundred one of this
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD07824-04-5
A. 4313--A 2
1 chapter, shall be eligible for credit for military service as hereinaft-
2 er provided:
3 1. A member, upon application to such retirement system, may obtain a
4 total not to exceed three years of service credit for up to three years
5 of military duty, as defined in section two hundred forty-three of the
6 military law, if the member was honorably discharged from the military
7 [and all or part of such military service was rendered during the
8 following periods: (a) commencing December seventh, nineteen hundred
9 forty-one and terminating December thirty-first, nineteen hundred
10 forty-six; (b) commencing June twenty-seventh, nineteen hundred fifty
11 and terminating January thirty-first, nineteen hundred fifty-five; or
12 (c) commencing February twenty-eighth, nineteen hundred sixty-one and
13 terminating May seventh, nineteen hundred seventy-five;
14 2. A member, upon application to such retirement system, may obtain a
15 total not to exceed three years of service credit for up to three years
16 of military duty, as defined in section two hundred forty-three of the
17 military law, if honorably discharged therefrom, if all or part of such
18 services was rendered in the military conflicts referenced below, as
19 follows:
20 (a) hostilities participated in by the military forces of the United
21 States in Lebanon, from the first day of June, nineteen hundred eighty-
22 three to the first day of December, nineteen hundred eighty-seven, as
23 established by receipt of the armed forces expeditionary medal, the navy
24 expeditionary medal, or the marine corps expeditionary medal;
25 (b) hostilities participated in by the military forces of the United
26 States in Grenada, from the twenty-third day of October, nineteen
27 hundred eighty-three to the twenty-first day of November, nineteen
28 hundred eighty-three, as established by receipt of the armed forces
29 expeditionary medal, the navy expeditionary medal, or the marine corps
30 expeditionary medal;
31 (c) hostilities participated in by the military forces of the United
32 States in Panama, from the twentieth day of December, nineteen hundred
33 eighty-nine to the thirty-first day of January, nineteen hundred ninety,
34 as established by receipt of the armed forces expeditionary medal, the
35 navy expeditionary medal, or the marine corps expeditionary medal; or
36 (d) hostilities participated in by the military forces of the United
37 States, from the second day of August, nineteen hundred ninety, to the
38 end of such hostilities in case of a veteran who served in the theater
39 of operations including Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the
40 United Arab Emirates, Oman, the Gulf of Aden, the Gulf of Oman, the
41 Persian Gulf, the Red Sea, and the airspace above these locations].
42 [3] 2. A member must have at least five years of credited service (not
43 including service granted hereunder) to be eligible to receive credit
44 under this section.
45 [4] 3. To obtain such credit, a member shall pay such retirement
46 system, for deposit in the fund used to accumulate employer contrib-
47 utions, a sum equal to the product of the number of years of military
48 service being claimed and three percent of such member's compensation
49 earned during the twelve months of credited service immediately preced-
50 ing the date that the member made application for credit pursuant to
51 this section. If permitted by rule or regulation of the applicable
52 retirement system, the member may pay such member costs by payroll
53 deduction for a period which shall not exceed the time period of mili-
54 tary service to be credited pursuant to this section. In the event the
55 member leaves the employer payroll prior to completion of payment, he or
56 she shall forward all remaining required payments to the appropriate
A. 4313--A 3
1 retirement system prior to the effective date of retirement. If the full
2 amount of such member costs is not paid to the appropriate retirement
3 system prior to the member's retirement, the amount of service credited
4 shall be proportional to the total amount of the payments made prior to
5 retirement.
6 [5] 4. In no event shall the credit granted pursuant to this section,
7 when added to credit granted for military service with any retirement
8 system of this state pursuant to this or any other provision of law,
9 exceed a total of three years.
10 [6] 5. To be eligible to receive credit for military service under
11 this section, a member must make application for such credit before the
12 effective date of retirement. [Notwithstanding the foregoing provisions
13 of this subdivision, an individual who retired on or after December
14 twenty-first, nineteen hundred ninety-eight and before the effective
15 date of this section may make application for credit pursuant to this
16 section within one year following the effective date of this section, in
17 which event, the cost to the retiree would be based on the twelve month
18 period immediately preceding retirement.]
19 [7] 6. All costs for service credited to a member pursuant to this
20 section, other than the member costs set forth in subdivision [three]
21 two of this section, shall be paid by the state and all employers which
22 participate in the retirement system in which such member is granted
23 credit.
24 [8] 7. A member who has purchased military service credit pursuant to
25 section two hundred forty-four-a of the military law shall be entitled
26 to a refund of the difference between the amount paid by the member for
27 such purchase and the amount that would be payable if service had been
28 purchased pursuant to this section.
29 [9] 8. Notwithstanding any other provision of law, in the event of
30 death prior to retirement, amounts paid by the member for the purchase
31 of military service credit pursuant to this section shall be refunded,
32 with interest, to the extent the military service purchased with such
33 amounts does not produce a greater death benefit than would have been
34 payable had the member not purchased such credit.
35 Notwithstanding any other provision of law, in the event of retire-
36 ment, amounts paid by the member for the purchase of military service
37 credit pursuant to this section shall be refunded, with interest, to the
38 extent the military service purchased with such amounts does not produce
39 a greater retirement allowance than would have been payable had the
40 member not purchased such credit.
41 [10.] 9. Anything to the contrary in subdivision [four] three of this
42 section notwithstanding, to obtain such credit, a member who first joins
43 a public retirement system of the state on or after April first, two
44 thousand twelve shall pay such retirement system, for deposit in the
45 fund used to accumulate employer contributions, a sum equal to the prod-
46 uct of the number of years of military service being claimed and six
47 percent of such member's compensation earned during the twelve months of
48 credited service immediately preceding the date that the member made
49 application for credit pursuant to this section.
50 § 3. Notwithstanding any other provision of law to the contrary, none
51 of the provisions of this act shall be subject to section 25 of the
52 retirement and social security law.
53 § 4. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend Section 1000 of the Retirement and Social Secu-
rity Law to allow active members of public retirement systems of New
A. 4313--A 4
York State to claim service credit for up to three years of military
service, regardless of when or where it was performed. Currently, active
members can receive service credit for military service performed, but
only during specified periods of war. A member must have at least five
years of credited service to be eligible and make application for such
credit before the effective date of retirement. To obtain such credit, a
member must make payments as required in Section 1000 of the Retirement
and Social Security Law. Tier 1, 2, 3, 4 and 5 members are required to
pay three percent of salary earned during the twelve months of credited
service immediately preceding the year in which a claim is made for each
year of military service. Tier 6 members are required to pay six percent
of salary earned during the twelve months of credited service immediate-
ly preceding the year in which a claim is made for each year of military
service.
It is not possible to determine the total annual cost to the employers
of members of the New York State Teachers' Retirement System since the
total amount of service credit which would be claimed under this bill
cannot be estimated. However, the cost to the employers of members of
the New York State Teachers' Retirement System is estimated to be
$21,700 per year of service credited for Tier 1 and 2 members, $21,000
per year of service credited for Tier 3 and 4 members, $20,900 per year
of service credited for Tier 5 members and $15,800 per year of service
credited for Tier 6 members if this bill is enacted. These costs would
be offset by member payments required under Section 1000 of the Retire-
ment and Social Security Law.
The source of this estimate is Fiscal Note 2015-2 dated December 19,
2014 prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2015 Legislative Session.
I, Richard A. Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American Academy of Actuaries
and I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would allow up to three (3) years of service credit for
military duty by removing all existing requirements that such military
service be performed during certain war periods, during certain hostil-
ities while in the theater of operations or upon the receipt of an
expeditionary medal. However, the total service credit granted for
active and peacetime military service shall not exceed three (3) years.
Tier 6 members would be required to make a payment of six percent of
current compensation per year of additional service credit granted by
this bill. Members of all other Tiers would be required to make a
payment of three percent of current compensation per year of additional
service credit granted by this bill. Members must have at least five (5)
years of credited service (not including military service). In addition,
the provisions of this bill are not subject to Section 25 of the Retire-
ment and Social Security Law.
If this bill is enacted, insofar as this proposal affects the New York
State and Local Employees' Retirement System (ERS), it is estimated that
the past service cost will average approximately 12% (9% for Tier 6) of
an affected members' compensation for each year of additional service
credit that is purchased.
Insofar as this proposal affects the New York State and Local Police
and Fire Retirement System (PFRS), it is estimated that the past service
cost will average approximately 17% (14% for Tier 6) of an affected
A. 4313--A 5
members' compensation for each year of additional service that is
purchased.
The exact number of current members as well as future members who
could be affected by this legislation cannot be readily determined.
ERS and PFRS costs would be shared by the State of New York and the
participating employers in the ERS and PFRS.
Summary of relevant resources:
The membership data used in measuring the impact of the proposed
change was the same as that used in the March 31, 2014 actuarial valu-
ation. Distributions and other statistics can be found in the 2014
Report of the Actuary and the 2014 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2010,
2011, 2012, 2013 and 2014 Annual Report to the Comptroller on Actuarial
Assumptions, and the Codes Rules and Regulations of the State of New
York: Audit and Control.
The Market Assets and GASB disclosures are found in the March 31, 2014
New York State and Local Retirement System Financial Statements and
Supplementary Information.
I am a member of the American Academy of Actuaries and meet the Quali-
fication Standards to render the actuarial opinion contained herein.
This estimate, dated January 22, 2015 and intended for use only during
the 2015 Legislative Session, is Fiscal Note No. 2015-40, prepared by
the Actuary for the New York State and Local Employees' Retirement
System and the New York State and Local Police and Fire Retirement
System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
With respect to certain New York City Retirement Systems ("NYCRS"),
this proposed legislation would amend New York State Retirement and
Social Security Law ("RSSL") Section 1000 to provide certain members of
the New York City Employees' Retirement System ("NYCERS"), the New York
City Teachers' Retirement System ("NYCTRS"), the New York City Board of
Education Retirement System ("BERS"), the New York City Police Pension
Fund ("POLICE") and the New York Fire Department Pension Fund ("FIRE"),
collectively, the New York City Retirement Systems ("NYCRS"), the oppor-
tunity to obtain additional retirement service credits for certain Mili-
tary Service.
This proposed legislation would permit any NYCRS member, prior to the
effective date of retirement, to make application for these additional
service credits.
To obtain such Military Service credits, members would be required to
pay to the appropriate NYCRS, for each year of Military Service
purchased, a sum equal to 3.0% (6.0% for members who first join on and
after April 1, 2012) of such member's compensation earned during the
twelve months of credited service immediately preceding the date that
the member makes application for credit.
MEMBERS IMPACTED: Insofar as this proposed legislation relates to the
NYCRS, the number of members who could potentially benefit from this
proposed legislation cannot be readily determined.
IMPACT ON BENEFITS: With respect to the NYCRS, a member who served in
the U.S. military and received an honorable discharge would be permit-
ted, after completing five years of credited service (exclusive of the
service credit that could be purchased under this proposed legislation),
to purchase a maximum of three years of Military Service (inclusive of
any prior purchases of Military Service credit).
A. 4313--A 6
In order to purchase the Military Service credits provided in this
proposed legislation, a member must have been honorably discharged
following a period of "military duty" as defined in New York State Mili-
tary Law Section 243.
If a member's Military Service meets these conditions, then that
member would be permitted to purchase a maximum of three years of Mili-
tary Service (inclusive of any previously-received Military Service
credit attributable to any period of the member's military career.
For purposes of the respective NYCRS, each year of Military Service
credit purchased would apply toward providing the member with a year of
benefit accrual under the particular benefit formula covering the
member.
In certain circumstances, the member also may be entitled to utilize
such Military Service as qualifying service for benefit eligibility
purposes.
For purposes of this Fiscal Note, it has been assumed that members who
purchase Military Service in accordance with this proposed legislation
would generally be entitled to count such service for benefit accrual
purposes and for the purpose of qualifying for benefits.
FINANCIAL IMPACT - OVERVIEW: With respect to an individual member, the
additional cost of this proposed legislation would depend on the length
of all New York City service, age, salary history and Plan in which the
member participates, as well as the number of years of service credit
purchased.
With respect to employers participating in the NYCRS, the ultimate
employer cost of this proposed legislation would be determined by the
increase in benefits to be paid, the impact of certain benefits commenc-
ing earlier and the reduction in certain future member contributions.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: The additional Actuarial
Present Value ("APV") of benefits would depend on the number, salaries,
ages and lengths of Military Service purchased by members who would be
affected by this proposed legislation.
With respect to the NYCRS and based on the census data and assumptions
herein, the enactment of this proposed legislation would increase the
Actuarial Present Value ("APV") of benefits ("APVB") by approximately
$155.4 million as of June 30, 2015.
In addition, with respect to the NYCRS, the APV of future member
contributions (primarily attributable to the payments by members of 3.0%
(6.0% for members who first join on and after April 1, 2012) of salary
per year of Military Service purchased) would increase by approximately
$23.4 million when measured as of June 30, 2015.
Consequently, with respect to the NYCRS, the APV of net future employ-
er contributions would increase by approximately $132.0 million as of
June 30, 2015.
FINANCIAL IMPACT - ANNUAL EMPLOYER COSTS: The ultimate cost of a
pension plan is the benefits it pays. With respect to the NYCRS, the
financing of that ultimate cost depends upon the census data used and
the actuarial assumptions and methods employed. Assuming that all eligi-
ble members were to purchase the eligible Military Service during Fiscal
Year 2015 and based on the Actuary's actuarial assumptions and methods
in effect as of June 30, 2013, the enactment of this proposed legis-
lation would increase annual employer costs by approximately $15.7
million per year.
FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: The impact of the proposed
legislation on employer contributions would be a function of the census
A. 4313--A 7
data (i.e., age/service/salary, etc.) reported to the Actuary and of the
timing of the members electing to buy back their Military Service.
With respect to the NYCRS, based on the Actuary's actuarial assump-
tions and methods in effect as of June 30, 2013, the enactment of this
proposed legislation would ultimately increase employer contributions by
approximately the estimated additional annual employer costs.
If applications for buying back Military Service were completed during
Fiscal Year 2015 and the NYCRS census data were updated to reflect this
information by June 30, 2015, then employer contributions would first be
impacted for Fiscal Year 2017.
If the Military Service buybacks were completed after Fiscal Year
2015, then the increase in employer contributions would be delayed.
FINANCIAL IMPACT - SUMMARY: The following table summarizes the esti-
mated financial impact of this proposed legislation on the NYCRS.
Estimated Financial Impact to Allow Members of the NYCRS
To Purchase up to Three Years of Military Service Credit
($ Millions)
Estimated
Additional First Year
Additional APV of Future Additional
Retirement APV of Employer Employer
System Benefits Contributions{1} Costs{2}
NYCERS $52.8 $ 44.4 $5.3
NYCTRS 15.6 12.9 1.5
BERS 2.2 1.8 0.2
POLICE 67.5 57.9 6.9
FIRE 17.3 15.0 1.8
TOTAL $155.4 $132.0 $15.7
{1} Equals increase in APVB minus increase in APV of future member
contributions.
{2} Estimated Additional Employer Costs are determined without regard
to the funded status of the Retirement Systems and represent the best
estimates of the ultimate annual financial burden of the proposed legis-
lation. Estimated Additional Employer Contributions would ultimately
approximate Estimated Additional Employer Costs.
ADDITIONAL EMPLOYER COSTS - GENERAL: In general, the real cost of the
enactment of this proposed legislation would be the additional benefits
paid.
OTHER COSTS: Not measured in this Fiscal Note is the impact of this
proposed legislation on the Manhattan and Bronx Surface Transit Operat-
ing Authority ("MaBSTOA") or on State or Local employers with respect to
their participation in the New York State and Local Retirement Systems
("NYSLRS") or the New York State Teachers' Retirement System ("NYSTRS").
Also, this Fiscal Note does not include analyses of the impact of this
proposed legislation on the expected increases in administrative costs
or costs for Other Post-Employment Benefits ("OPEB").
CENSUS DATA: The census data used for estimates of APV of benefits and
employer contributions presented herein are the active members included
in the June 30, 2013 (Lag) actuarial valuations of NYCERS, NYCTRS, BERS,
POLICE and FIRE used to determine the Updated Preliminary Fiscal Year
2015 employer contributions.
A. 4313--A 8
ACTUARIAL ASSUMPTIONS AND METHODS: Additional APV of benefits, of
member contributions and of employer contributions have been estimated
as of June 30, 2015 using various approximating techniques and assump-
tions by the Actuary, including, but not limited to:
* A certain percentage of Veterans being honorably discharged.
* A certain percentage of honorably discharged Veterans being disa-
bled.
* Different percentages of members by NYCRS having prior Military
Service.
* Each eligible member purchasing an average of 2.5 years of the Mili-
tary Service.
Changes in employer contributions have been estimated assuming the
increase in the APV of Future Employer Contributions would be financed
over a time period comparable to that used for actuarial losses under
the Entry Age Actuarial Cost Method. Using this approach, the Additional
APV of Future Employer Contributions would be amortized over a closed
15-year period (14 payments under One-Year Lag Methodology) using level
dollar payments.
ECONOMIC VALUE OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in this
Fiscal Note are those appropriate for budgetary models and determining
annual employer contributions to the NYCRS.
However, the economic assumptions that are used for determining
employer contributions do not develop risk-adjusted economic values of
benefits. Such risk-adjusted, economic values of benefits would likely
differ significantly from those developed by the budgetary models.
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Acting
Chief Actuary for the New York City Retirement Systems. I am a Fellow of
the Society of Actuaries and a Member of the American Academy of Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-10, dated
March 5, 2015, prepared by the Acting Chief Actuary for the New York
City Employees' Retirement System, the New York City Teachers' Retire-
ment System, the New York City Board of Education Retirement System, the
New York City Police Pension Fund and the New York Fire Department
Pension Fund.
