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A10715 Summary:

BILL NOA10715A
 
SAME ASSAME AS S08486-A
 
SPONSORAbbate
 
COSPNSRBarnwell, Kim, Pheffer Amato, Rozic, Ortiz, Hevesi, Arroyo, Weprin, Simotas, Miller MG, Cymbrowitz, Fernandez, Skoufis, Dinowitz, Carroll, Joyner, Dickens
 
MLTSPNSR
 
Amd R & SS L, generally
 
Provides for the equalization of retirement benefits for police officers across New York state.
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A10715 Actions:

BILL NOA10715A
 
05/15/2018referred to governmental employees
06/04/2018amend and recommit to governmental employees
06/04/2018print number 10715a
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A10715 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10715A
 
SPONSOR: Abbate
  TITLE OF BILL: An act to amend the retirement and social security law, in relation to the equalization of retirement benefits for police officers across New York state   PURPOSE OR GENERAL IDEA OF BILL: Provide New York City police officers and firefighters with the option to elect to receive benefits as they existed before the Tier 2 extender was vetoed by Governor Paterson.   SUMMARY OF PROVISIONS: Section one of the bill amends section 500(c) of the Retirement and Social Security Law, as amended by section 9-a of part A of chapter 504 of the laws of 2009, is amended to include Police/Fire Members, as such term is defined in Retirement and Social Security Law section 501, ("Police/Fire Members") who have made an irrevocable election to be subject to Article 22 ("Electing Police/Fire Members"). Section two of the bill amends section 1200(a) of the Retirement and Social Security Law, as added by section 1 of part A of chapter 504 of the laws of 2009, to exclude members of the New York City Police Pension Fund ("PPF") and the New York City Fire Department Pension Fund ("FPF") who are not Electing Police/Fire Members. Subdivision b is amended to include the PPF and FPF in the definition of "retirement system." Section three of the bill amends section 1201 of the Retirement and Social Security Law, as added by section 1 of part A of chapter 504 of the laws of 2009, to include all members of a retirement system as both terms are defined under section 1200 of this article. Section four of the bill amends section 1202 of the Retirement and Social Security Law by adding a new subdivision d to prescribe the computation of the vested retirement benefit for Electing Police/Fire Members. Section five of the bill amends section 1204 of the Retirement and Social Security Law, as amended by chapter 18 of the laws of 2012, to include Electing Police/Fire Members. Section six of the bill amends section 1205 of the Retirement and Social Security Law, as added by section 1 of part A of chapter 504 of the laws of 2009, to reopen the election for members of the New York State Police and Fire Retirement System who are subject to the provisions of Article 14 to elect to become subject to the provisions of Article 22. Such election must be made within 120 days of the effective date of this bill. The amendments to this section also include administrative provisions regarding the procedure for Police/Fire Members to elect to be covered by the provisions of Article 22. Section seven of the bill amends section 1206 of the Retirement and Social Security Law, as added by section 1 of part A of chapter 504 of the laws of 2009, to add Title 13 of the Administrative Code of the City of New York. Section eight of the bill amends section 1207(a)(2) of the Retirement and Social Security Law, as added by chapter 303 of the laws of 2017 to allow members to take loans against their retirement contributions. Section nine of the bill amends section 1209 of the Retirement and Social Security Law, as added by chapter 18 of the laws of 2012, to include Electing Police/Fire Members. Section ten of the bill amends section 1210 of the Retirement and Social Security Law, as added by chapter 18 of the laws of 2012, to include Electing Police/Fire Members. Section eleven of the bill states that the act shall take effect imme- diately.   JUSTIFICATION: The Police .& Fire Pension Equalization and Fairness Act of 2018 (the "Act") would restore the pension plan benefits for New York City police officers and -firefighters, among others, as they existed prior to the veto of the Tier 2 extender by Governor David Paterson in 2009, while also providing for the reforms in pension benefits that were enacted after the veto for Tier 6 members of the New York State Police and Fire Retirement System. The Act would merely restore benefits for police officers and firefighters that were never intended to be taken away in 2009, but also recognizes that certain pension reforms that were subse- quently enacted for other police officers and firefighters should also be applicable.   PRIOR LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: See the bill.   EFFECTIVE DATE: This act shall take effect immediately.
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A10715 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                        10715--A
 
                   IN ASSEMBLY
 
                                      May 15, 2018
                                       ___________
 
        Introduced by M. of A. ABBATE -- 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
          the equalization of retirement benefits for police officers across New
          York state

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Subdivision c of section 500 of the retirement  and  social
     2  security  law, as amended by section 9-a of part A of chapter 504 of the
     3  laws of 2009, is amended to read as follows:
     4    c. If the comptroller certifies that the contribution rate under  this
     5  article  for  any  participating  employer  who  is participating on the
     6  effective date hereof would be at least one percent higher than the rate
     7  which would be applicable to  such  employer  for  an  employee  who  is
     8  subject  to  article  eleven  of this chapter and who was hired prior to
     9  July first, nineteen hundred seventy-six, the provisions of this article
    10  shall not apply with respect to such participating  employer,  provided,
    11  however  that members who first join the New York state and local police
    12  and fire retirement system on or after January first, two  thousand  ten
    13  and police/fire members, as that term is defined in section five hundred
    14  one  of  this  article,  who  have made an election to be subject to the
    15  provisions of article twenty-two of this chapter pursuant to subdivision
    16  b or c of section twelve hundred five of  this  chapter,  shall  not  be
    17  subject to the provisions of this article. In such event, the provisions
    18  of  article eleven and article twenty-two of this chapter shall continue
    19  to be applicable to such participating employer and  its  employees,  as
    20  provided  in  section  four  hundred fifty-one of this chapter. If, as a
    21  result of actuarial experience, such employer's contribution rate should
    22  increase to the extent that it is not at least one  percent  lower  than
    23  the  contribution  rate  under this article, then, upon certification of
    24  such fact by the comptroller, the provisions of this  subdivision  shall
    25  no longer apply with respect to the employees of such employer who ther-
    26  eafter first join or rejoin a public retirement system.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15632-05-8

        A. 10715--A                         2
 
     1    §  2. Section 1200 of the retirement and social security law, as added
     2  by section 1 of part A of chapter 504 of the laws of 2009, is amended to
     3  read as follows:
     4    § 1200. Definitions. For purposes of this article the terms:
     5    a. "Member" shall mean a person who is employed as a police officer or
     6  firefighter  by  any  employer other than the city of New York who first
     7  joins [the] a retirement system on or after January first, two  thousand
     8  ten  or  a  police/fire  member, as that term is defined in section five
     9  hundred one of this chapter, who  has  made  an  election,  pursuant  to
    10  subdivision b or c of section twelve hundred five of this article, to be
    11  subject to the provisions of this article.
    12    b.  "Retirement system" shall mean the New York state and local police
    13  and fire retirement system, the New York city police  pension  fund,  or
    14  the New York city fire department pension fund.
    15    §  3. Section 1201 of the retirement and social security law, as added
    16  by section 1 of part A of chapter 504 of the laws of 2009, is amended to
    17  read as follows:
    18    § 1201. Applicability. Notwithstanding any provision  of  law  to  the
    19  contrary,  the  provisions  of  this  article shall be applicable to all
    20  [employees in the retirement system who first joined such system  on  or
    21  after January first, two thousand ten] members of a retirement system as
    22  those terms are defined in section twelve hundred of this article.
    23    §  4.    Section  1202  of  the  retirement and social security law is
    24  amended by adding a new subdivision d to read as follows:
    25    d. Notwithstanding anything to the contrary  in  any  other  law,  the
    26  amount  of  the vested retirement benefit for any member who has made an
    27  election to be subject to the provisions of  this  article  pursuant  to
    28  subdivision b or c of section twelve hundred five of this article, shall
    29  be  equal  to  one-sixtieth  of the member's final average salary on the
    30  date of his or her discontinuance of service,  multiplied  by  a  number
    31  equal  to  the  number of years of service credited to the member on the
    32  date of such discontinuance.
    33    § 5.   Section 1204 of the retirement  and  social  security  law,  as
    34  amended  by  chapter  18  of  the  laws  of  2012, is amended to read as
    35  follows:
    36    §  1204.  Member  contributions.  Members  who  are  subject  to   the
    37  provisions  of  this  article  shall  contribute three percent of annual
    38  wages to the retirement system in which  they  have  membership,  except
    39  that  beginning April first, two thousand thirteen for members who first
    40  become members of the New York state and local police and  fire  retire-
    41  ment  system  on  or after April first, two thousand twelve; for members
    42  who have made an election to be subject to the provisions of this  arti-
    43  cle  pursuant  to  subdivision  b of section twelve hundred five of this
    44  article, beginning on the date that such  election  is  filed  with  the
    45  administrative  head  of the retirement system; and for members who have
    46  made an election to be subject to the provisions of this article  pursu-
    47  ant  to  subdivision  c  of section twelve hundred five of this article,
    48  beginning on the date that the member joins the retirement  system,  the
    49  rate at which each such member shall contribute in any current plan year
    50  (April  first to March thirty-first) shall be determined by reference to
    51  the wages of such member in the second plan year (April first  to  March
    52  thirty-first) preceding such current plan year as follows:
    53    a. members with wages of forty-five thousand dollars per annum or less
    54  shall contribute three per centum of annual wages;

        A. 10715--A                         3
 
     1    b.  members with wages greater than forty-five thousand per annum, but
     2  not more than fifty-five thousand per annum shall contribute  three  and
     3  one-half per centum of annual wages;
     4    c.  members with wages greater than fifty-five thousand per annum, but
     5  not more than seventy-five thousand per annum shall contribute four  and
     6  one-half per centum of annual wages;
     7    d. members with wages greater than seventy-five thousand per annum but
     8  not  more  than one hundred thousand per annum shall contribute five and
     9  three-quarters per centum of annual wages; and
    10    e. members with wages greater than  one  hundred  thousand  per  annum
    11  shall contribute six per centum of annual wages.
    12    Notwithstanding  the  foregoing,  during  each of the first three plan
    13  years (April first to March  thirty-first)  in  which  such  member  has
    14  established membership in [the New York state and local police and fire]
    15  a retirement system, such member shall contribute a percentage of annual
    16  wages  in accordance with the preceding schedule based upon a projection
    17  of annual wages provided by the employer.  Effective  April  first,  two
    18  thousand  twelve,  all members subject to the provisions of this article
    19  shall not be required to  make  member  contributions  on  annual  wages
    20  excluded  from  the  calculation  of  final  average  salary pursuant to
    21  section [1203] twelve hundred three of this  article.  Nothing  in  this
    22  section,  however,  shall  be  construed  or  deemed to allow members to
    23  receive a refund of any member contributions on such wages paid prior to
    24  April first, two thousand twelve.
    25    Members who are enrolled in a retirement plan that limits  the  amount
    26  of  creditable service a member can accrue shall not be required to make
    27  contributions pursuant to this section after accruing the maximum amount
    28  of service credit allowed by the  retirement  plan  in  which  they  are
    29  enrolled. The state comptroller, or for the New York city police pension
    30  fund  and  the  New York city fire department pension fund, the board of
    31  trustees, shall promulgate such regulations  as  may  be  necessary  and
    32  appropriate  with  respect  to  the  deduction of such contribution from
    33  members' wages and for the maintenance of any special fund or funds with
    34  respect to amounts so contributed. In no way shall the  member  contrib-
    35  utions  made  pursuant  to  this  section be used to provide for pension
    36  increases or annuities of any kind.
    37    § 6. Section 1205 of the retirement and social security law, as  added
    38  by section 1 of part A of chapter 504 of the laws of 2009, is amended to
    39  read as follows:
    40    §  1205.  Recalculation  of  benefits.    a. Notwithstanding any other
    41  provision of law, any member who has joined the New York state and local
    42  police and fire retirement system pursuant to the provisions of  article
    43  fourteen  of  this chapter on or after July first, two thousand nine may
    44  elect to have his or her retirement benefits calculated pursuant to this
    45  article by filing within one hundred twenty days of the  effective  date
    46  of  [this section] the chapter of the laws of two thousand eighteen that
    47  amended this subdivision a request for such calculation with the retire-
    48  ment system in the form and manner prescribed by the state comptroller.
    49    b.  Notwithstanding  any  provision  of  law  to  the  contrary,   any
    50  police/fire  member, as that term is defined in section five hundred one
    51  of this chapter who joined the New York state and local police and  fire
    52  retirement  system  between  July  first, two thousand nine and December
    53  thirty-first, two thousand ten, or who joined the New York  city  police
    54  pension  fund  or the New York city fire department pension fund between
    55  July first, two thousand nine and the effective date of this subdivision
    56  may make an irrevocable election that shall be duly executed  and  filed

        A. 10715--A                         4
 
     1  with  the administrative head of the retirement system no later than one
     2  hundred twenty days after the effective date of this subdivision  to  be
     3  subject to the provisions of this article and have his or her retirement
     4  benefits  calculated pursuant to this article.  Nothing in this subdivi-
     5  sion, however, shall be construed  or  deemed  to  allow  a  police/fire
     6  member who makes an irrevocable election pursuant to this subdivision to
     7  receive  a  refund of any member contributions for credited service that
     8  occurred before the date that such election is filed  by  a  police/fire
     9  member  with the New York city police pension fund or New York city fire
    10  department pension fund, as applicable to such member.
    11    c. Notwithstanding any provision  to  the  contrary,  any  police/fire
    12  member,  as  that  term  is  defined in section five hundred one of this
    13  chapter, who first becomes a member of the New York city police  pension
    14  fund  or the New York city fire department pension fund after the effec-
    15  tive date of this subdivision may  make  an  irrevocable  election  that
    16  shall  be  duly  executed  and filed with the administrative head of the
    17  retirement system no later than thirty days after joining the retirement
    18  system to be subject to the provisions of this article and have  his  or
    19  her retirement benefits calculated pursuant to this article.
    20    §  7. Section 1206 of the retirement and social security law, as added
    21  by section 1 of part A of chapter 504 of the laws of 2009, is amended to
    22  read as follows:
    23    § 1206. Conflicting provisions. Except as otherwise provided  in  this
    24  article,  or  in conflict therewith, the provisions of article eleven of
    25  this chapter and title thirteen of the administrative code of  the  city
    26  of New York, including any plan that has been elected by the employer or
    27  is  otherwise  applicable  under  article eight of this chapter or title
    28  thirteen of the administrative code of the city of New York shall govern
    29  the retirement benefits provided under this article. In the event of any
    30  conflict between the provisions of this article and any other  provision
    31  of law, this article shall govern.
    32    §  8.  Paragraph  2 of subdivision a of section 1207 of the retirement
    33  and social security law, as added by chapter 303 of the laws of 2017, is
    34  amended to read as follows:
    35    2. A member who first joins such system on or after January first, two
    36  thousand eighteen in active service who has credit for at least one year
    37  of member service may borrow, no more than once during each twelve month
    38  period, an amount, not less than one thousand dollars  and  which  would
    39  not  cause  the  balance  owed  pursuant  to this section, including any
    40  amounts borrowed then outstanding, to exceed (i) fifty  percent  of  the
    41  member's  total  contributions  made  pursuant  to section [five hundred
    42  seventeen of this chapter] twelve hundred four of this  article  or  any
    43  other  article  of this chapter (including interest credited at the rate
    44  set forth in subdivision c of [such] section five hundred  seventeen  of
    45  this  chapter  compounded  annually);  or  (ii)  fifty thousand dollars,
    46  whichever is less.
    47    § 9. Section 1209 of the retirement and social security law, as  added
    48  by chapter 18 of the laws of 2012, is amended to read as follows:
    49    § 1209. Final average salary.  For members who first become members of
    50  the  New  York  state  and local police and fire retirement system on or
    51  after April first, two thousand twelve, and members  who  have  made  an
    52  election  to  be  subject  to the provisions of this article pursuant to
    53  subdivision b or c of section twelve hundred five  of  this  article,  a
    54  member's final average salary shall be equal to one-fifth of the highest
    55  total  wages  earned  by  such  member  during  any continuous period of
    56  employment for which the member was credited with five years of  service

        A. 10715--A                         5
 
     1  credit;  provided, however, if the wages earned during any year of cred-
     2  ited service included in the period  used  to  determine  final  average
     3  salary  exceeds  the  average of the wages of the previous four years of
     4  credited  service  by more than ten percent, the amount in excess of ten
     5  percent shall be excluded from the computation of final average  salary.
     6  Wages  in  excess  of the annual salary paid to the governor pursuant to
     7  section three of  article  four  of  the  state  constitution  shall  be
     8  excluded  from  the  computation of final average salary for members who
     9  first become members of the New York state and  local  police  and  fire
    10  retirement system on or after April first, two thousand twelve.
    11    § 10. Section 1210 of the retirement and social security law, as added
    12  by chapter 18 of the laws of 2012, is amended to read as follows:
    13    §  1210. Wages.   For members who first become members of the New York
    14  state and local police and fire retirement  system  on  or  after  April
    15  first,  two thousand twelve, and members who have made an election to be
    16  subject to the provisions of this article pursuant to subdivision b or c
    17  of section twelve hundred five of  this  article,  the  following  items
    18  shall  not be included in the definition of wages: a. wages in excess of
    19  the annual salary paid to the governor  pursuant  to  section  three  of
    20  article  four  of  the  state  constitution,  b.  lump  sum payments for
    21  deferred compensation, sick leave, accumulated vacation or other credits
    22  for time not worked, c. any form of termination pay, d.  any  additional
    23  compensation  paid  in anticipation of retirement, and e. in the case of
    24  employees who receive wages from three or more  employers  in  a  twelve
    25  month period, the wages paid by the third and each successive employer.
    26    § 11. This act shall take effect immediately.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          This  bill  would  allow  certain  police  and  fire employees who are
        members of certain public retirement systems to become covered under the
        provisions of Article 22 of the  Retirement  and  Social  Security  Law.
        Insofar  as  this  bill  affects the New York State and Local Police and
        Fire Retirement System (PFRS), an individual who became a PFRS member on
        or after July 1, 2009 and before January 9, 2010 to elect to be  covered
        by  the  provisions  of Article 22 of the Retirement and Social Security
        Law.  Any member who becomes covered under a non-contributory plan would
        no longer be required to make  member  contributions.  Affected  members
        shall not receive a refund of their member contributions.
          If  this  bill is enacted, there would not be any cost to the State of
        New York and the participating employers in the New York State and Local
        Police and Fire Retirement System.
          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, 2017 actuarial valu-
        ation.  Distributions and other statistics can  be  found  in  the  2017
        Report  of  the  Actuary  and  the  2017  Comprehensive Annual Financial
        Report.
          The actuarial assumptions and methods used are described in the  2015,
        2016,  and  2017  Annual  Report to the Comptroller on Actuarial Assump-
        tions, 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, 2017
        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.

        A. 10715--A                         6
 
          This estimate, dated March 13, 2018, and intended for use only  during
        the  2018  Legislative  Session, is Fiscal Note No. 2018-74, prepared by
        the Actuary for the New York State and Local Retirement System.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
          SUMMARY  OF  BILL:  The proposed legislation would amend Article 22 of
        the Retirement and Social Security Law (RSSL)  to  permit  existing  and
        incoming  New  York  City Police Pension Fund (POLICE) and New York City
        Fire Department Pension Fund (FIRE) members subject to Article 14 of the
        RSSL (the Article 14 or Current  Plans)  to  voluntarily  elect,  within
        certain  time  periods,  a new retirement plan. The proposed legislation
        would provide these members with benefits, subject to  RSSL  Article  22
        restrictions,  pursuant to relevant Tier 2 provisions in Title 13 of the
        Administrative Code of the City of New York (ACCNY) as limited  by  RSSL
        Article 11 (the Article 22 or Proposed Plan).
          The  new  Article  22  Plan  would provide similar service, death, and
        disability benefits, including  applicable  statutory  presumptions  for
        Accident  Disability  Retirement  (ADR),  ADR  benefit calculations, and
        Ordinary Disability Retirement  (ODR)  benefit  calculations,  as  those
        provided  to  Tier  2 POLICE and FIRE members. However, all benefits and
        obligations  would  be  subject  to  Article  22  provisions,  including
        restrictions  on  pensionable  wages  and Final Average Salary (FAS), as
        well as member contribution rates enacted by Chapter 18 of the  laws  of
        2012.
          The  Article 22 Plan would provide neither annuity nor increased-take-
        home-pay (ITHP) benefits, would not apply  Article  14  social  security
        offsets,  and  would apply, or continue to apply where applicable, cost-
        of-living adjustments under Chapter 125 of the laws of 2000 (COLA) rath-
        er than any applicable Article 14 escalation. Article 22 POLICE and FIRE
        members would remain eligible to receive Variable Supplements Fund (VSF)
        benefits, would also become eligible, subject to  certain  restrictions,
        to take loans on member contributions, would be subject to a lower vest-
        ed  benefit  calculation,  and  would be entitled to earlier service and
        vested retirement payability.
          Effective Date: Upon enactment.
          For purposes of this Fiscal Note, POLICE, and FIRE members subject  to
        Article 14 of the RSSL, which include New York City Police/Fire, Revised
        Plan  and Enhanced Plan Members, as defined in RSSL Section 501, will be
        collectively referred to as Article 14 POLICE and  FIRE  Members.    All
        Article 14 POLICE and FIRE Members who elect the Article 22 Plan will be
        referred to as Article 22 POLICE and FIRE Members.
          IMPACT  ON  ELIGIBILITY  FOR  BENEFITS: Existing Article 14 POLICE and
        FIRE Members would have 120 days from  the  enactment  of  the  proposed
        legislation  to  elect  to  participate in the Article 22 Plan. Incoming
        Article 14 POLICE and FIRE Members would have 30 days  from  appointment
        to elect to participate in the Article 22 Plan. The changes in eligibil-
        ity  requirements  to  receive benefits between the Article 14 Plans and
        the Article 22 Plan are summarized below.
          Contributions:
          * The Current Plans, depending on title and plan, require contribution
        rates equal to 3% of salary, plus up to an additional 3% of  salary  for
        Enhanced Plan participation, until the earlier of separation or 25 years
        of service.
          *  The  Proposed  Plan requires contribution rates for all pensionable
        service and salary that are based on  historical  salary,  or  projected
        salary, bands as follows:

        A. 10715--A                         7
 
        Annual Wages During Plan Year           Contribution Rate
 
        Up to $45,000                           3.00%
        $45,001 to $55,000                      3.50%
        $55,001 to $75,000                      4.50%
        $75,001 to $100,000                     5.75%
        Greater than $100,000                   6.00%
 
          Allowable Service Credit:
          *  Current  Plans  restrict service credit to City and State uniformed
        Police and Fire service, which includes certain military service.
          * Under the Proposed Plan, Article 22 POLICE and FIRE  Members  would,
        in  addition  to  City  and  State uniformed Police and Fire service, be
        permitted to use certain prior uniformed or peace officer  service  with
        the  New  York City Employees' Retirement System or the State retirement
        systems, along with certain Child Care Leave purchased pursuant to Chap-
        ter 594 of the Laws of 2000, as allowable service credit.
          Minimum Service Credit Requirements:
          * The Current Plans require 20 years of service for an  early  service
        retirement,  22  years  for a normal service retirement, and 25 years of
        service, or deferral of payability to such point in time, for a  service
        retirement with full escalation.
          * The Proposed Plan would reduce the minimum requirement for a service
        retirement  for  Article  22  POLICE  and  FIRE  Members  to 20 years of
        service.
          Vesting:
          * In the Current Plans, members are required to complete five years of
        service before becoming eligible to receive, upon payability,  a  vested
        benefit.
          *  In  the Proposed Plan, members are required to complete 10 years of
        service before becoming eligible to receive, upon payability,  a  vested
        benefit.
          ODR:
          *  The  Current  Plans require five years of service to be eligible to
        apply for ODR.
          * The Proposed Plan permits an application for ODR regardless of years
        of service.
          ADR:
          * In the Current Plans, non-Enhanced Plan Members must waive  applica-
        ble  statutory presumptions to apply for disability retirement. Enhanced
        Plan  Members  are  eligible  to  utilize  applicable  presumptions  for
        purposes of ADR.
          *  Under  the  Proposed  Plan,  all Article 22 POLICE and FIRE Members
        would be eligible for applicable statutory presumptions for purposes  of
        ADR benefits upon becoming Article 22 Plan Members.
          Death Benefits:
          *  Eligibility  for Ordinary Death Benefits (ODB) and Accidental Death
        Benefits (ADB) would remain unchanged.
          IMPACT ON BENEFITS PAYABLE: Under the proposed legislation, the  bene-
        fits  provided  would neither include an annuity component nor a benefit
        due to ITHP currently available to Tier 2 POLICE and FIRE Members, would
        not be subject to any  applicable  social  security  offset  applied  to
        certain  Article 14 Plan benefits, and would apply, or continue to apply
        where applicable, COLA  rather  than  escalation  (for  those  currently
        eligible  to  receive  escalation). The remaining significant changes in

        A. 10715--A                         8

        benefit calculations between the Article 14 Plans  and  the  Article  22
        Plan are summarized below.
          Pensionable Wages:
          *  In  the  Current  Plans, wages are generally not limited, except as
        described below, for purposes of calculating the FAS.
          * The Proposed Plan limits wages to the Governor's annual  salary  for
        purposes  of  determining  member  contributions and the FAS, and limits
        from the FAS any overtime earnings that exceed 15% of annual wages.
          FAS Calculation:
          * In the Current Plans, the FAS, depending on Plan and type of retire-
        ment, is either a three-year  average  (FAS3)  or  a  five-year  average
        (FAS5),  and if the wages earned in one year of the FAS exceed the aver-
        age of the previous two or four years, respectively, by more  than  10%,
        the amount exceeding 10% is excluded from the FAS.
          *  In  the  Proposal  Plan,  all members are subject to a FAS5 for all
        retirement benefits, and if the wages earned in  one  year  of  the  FAS
        exceed  the  average  of the previous four years by more 10%, the amount
        exceeding 10% is excluded from the FAS.
          Service Retirement Benefit Calculation:
          * Current Plans limit service  credit  to  City  and  State  Uniformed
        Police  and  Fire service, and cap the service retirement benefit at 50%
        of the FAS at 22 years of service (with full escalation at 25  years  of
        service or deferred payability until such time).
          * The Proposed Plan would permit Article 22 POLICE and FIRE Members to
        retire  at  50%  of FAS5 after 20 years of service, and provide an addi-
        tional benefit of 1/60th of total earnings after their  respective  20th
        anniversary  of  allowable  service credit plus 75% times 1/60th of FAS5
        for all prior non-uniform City and State service.
          ADR Benefit Calculation:
          * Current Plans provide ADR benefits ranging from 50% to 75% of either
        a FAS3 or FAS5.
          * The Proposed Plan would provide Article 22 POLICE and  Fire  Members
        with  an ADR benefit of 75% of FAS5, plus 1/60th of total earnings after
        their respective 20th anniversary of allowable service credit.
          ODR Benefit Calculation:
          * Current Plans provide ODR benefits of 33-1/3% of either  a  FAS3  or
        FAS5.
          *  The  Proposed Plan would provide Article 22 POLICE and FIRE Members
        with less than 10 years service with an ODR benefit of 33-1/3% of  FAS5,
        with 10 or more years of service with an ODR benefit of 50% of FAS5, and
        with 20 or more years of service an ODR benefit of 1/40th of FAS5 multi-
        plied by years of service.
          Vested Retirement Benefit Calculation:
          *  Current  Plans provide vested retirement benefits, after 5 years of
        service, of 2.1% of FAS3 or FAS5 times years of service, payable without
        escalation at what would have been  the  member's  20th  anniversary  of
        allowable  service  credit,  or payable with partial or full escalation,
        respectively, on the 22nd or 25th anniversary.
          * The Proposed Plan would permit Article 22 POLICE and FIRE Members to
        receive vested benefits, after 10 years of service, of  1/60th  of  FAS5
        multiplied by years of service, plus 75% of 1/60th of FAS5 for all prior
        non-uniform City and State service, at what would have been the member's
        20th anniversary of allowable service credit. However, in no event shall
        a  vested  benefit  be less than the actuarial equivalent of accumulated
        member contributions with 5% interest compounded annually.
          ODB Calculation:

        A. 10715--A                         9
 
          * Current Plans provide an ODB of three times salary rounded up to the
        nearest $1,000.
          *  The  Proposed Plan would provide Article 22 POLICE and FIRE Members
        with less than 20 years of service an ODB of three times salary  rounded
        up  to  the nearest $1,000, and a death gamble for those with 20 or more
        years of service. A death gamble is a lump sum present value  equivalent
        of  a  presumed  lifetime  service  retirement  benefit  of the deceased
        member.
          ADB Calculation:
          * The ADB calculation, aside from the FAS applied, is essentially  the
        same  in  the  Current and Proposed Plans comprised of 50% of salary and
        the Special Accidental Death Benefit (SADB), which, when  combined  with
        the ADB, is approximately 100% of a determined salary.
          FINANCIAL  IMPACT  -  CHANGES  IN PROJECTED EMPLOYER CONTRIBUTIONS: In
        accordance  with  ACCNY  Section  13-638.2(k-2),  new  Unfunded  Accrued
        Liability  (UAL)  attributable to benefit changes are to be amortized as
        determined by the Actuary but generally over the remaining working life-
        time of those impacted by the benefit changes. As of June 30,  2017,  if
        this  proposed legislation is enacted, the remaining working lifetime of
        Article 14 POLICE and FIRE members, assuming  Article  22  Plan  partic-
        ipation, is approximately 15 years and 21 years, respectively.
          For  this  proposed legislation the change in UAL was amortized over a
        15-year period (14 payments under  the  OYLM)  for  POLICE  and  over  a
        21-year  period (20 payments under the OYLM) for FIRE using level dollar
        payments.
          Since it cannot be precisely determined how many Article 14 POLICE and
        FIRE Members will elect to participate in the Article 22  Plan,  results
        are  shown assuming that all existing and incoming Article 14 POLICE and
        FIRE Members will elect to participate in the Article 22 Plan.
          The following Table 1 presents an estimate of  the  increases  in  the
        employer  contributions to POLICE and FIRE for Fiscal Years 2019 through
        2023 due to the changes in provisions for Article  22  POLICE  and  FIRE
        Members  based on the applicable actuarial assumptions and methods noted
        herein:
 
                                         TABLE 1
 
                   Fiscal Year     Increase in Employer Contributions*
                                              ($ Millions)
                      2019                        $19.1
                      2020                         24.1
                      2021                         29.3
                      2022                         34.5
                      2023                         39.8

        * The increase in employer contributions is, in part, due to the shorter
        expected working lifetime of Article 22 POLICE and  FIRE  members  which
        decreases the period over which the costs are spread.
 
          CONTRIBUTION  TIMING:  For purposes of this Fiscal Note, it is assumed
        that the changes in the employer contributions would  be  reflected  for
        the  first  time in the June 30, 2017 actuarial valuations of POLICE and
        FIRE. Under the One-Year Lag Methodology (OYLM), the first  fiscal  year
        in  which  these changes in benefits would impact employer contributions
        would be Fiscal Year 2019.
          OTHER COSTS: Not measured in this Fiscal Note are the following:

        A. 10715--A                        10
 
          * The initial, additional administrative costs of POLICE and  FIRE  to
        implement the proposed legislation.
          *  The  impact  of  this  proposed legislation on Other Postemployment
        Benefit (OPEB) costs.
          CENSUS DATA: The  starting  census  data  used  for  the  calculations
        presented  herein  is  the census data used  in the Preliminary June 30,
        2017 (Lag) actuarial valuations of POLICE  and  FIRE  to  determine  the
        Preliminary Fiscal Year 2019 employer contributions.
          The Article 14 POLICE Members had an average age of approximately 29.7
        years, average service of approximately 3.3 years, and an average salary
        of  approximately  $75,000  as  of  June  30,  2017. The Article 14 FIRE
        Members had an average age of approximately 30.0 years, average  service
        of  approximately  2.2  years,  and  an  average salary of approximately
        $59,000 as of June 30, 2017.
          ACTUARIAL ASSUMPTIONS AND METHODS: The  additional  employer  contrib-
        utions presented herein have been calculated based on the same actuarial
        assumptions  and methods in effect for the June 30, 2017 (Lag) actuarial
        valuations used to determine the Preliminary Fiscal Year  2019  employer
        contributions  of  POLICE  and  FIRE.  Please note these assumptions and
        methods are subject to change as this valuation is not considered  final
        until the end of the Fiscal Year 2019.
          In determining the change in employer contributions, the probabilities
        of  accidental  disability  used  to value the Proposed Plan equal those
        currently used for Tier 2 POLICE and FIRE members who are  not  eligible
        for World Trade Center benefits.
          For  purposes  of estimating the impact of substituting COLA for esca-
        lation for certain Article 22 POLICE and FIRE Members, an assumption  of
        2.5%  was  used  for escalation, which is consistent with the underlying
        Consumer Price  Inflation  (CPI)  assumption  of  2.5%  per  year.  This
        compares  with the current COLA assumption of 1.5% per year (i.e. 50% of
        CPI adjusted to recognize a 1.0% minimum and 3.0% maximum) on the  first
        $18,000 of benefit.
          New  entrants  were projected to replace the members expected to leave
        the active population to maintain a steady-state population. New entrant
        salaries and future salary increases are consistent  with  those  to  be
        used in projections for the New York City Office of Management and Budg-
        et in April 2018 (Preliminary Projections).
          The  following  Table 2a presents the total number of active employees
        of POLICE used in the projections, assuming a level work force, and  the
        cumulative number (i.e. net of withdrawals) of Article 14 POLICE Members
        as of each June 30 from 2017 through 2021.
                                         TABLE 2a

                       June 30   Tier 1 & 2  Tier 3    Total
                         2017      23,334    12,831    36,165
                         2018      21,227    14,938    36,165
                         2019      19,345    16,820    36,165
                         2020      17,799    18,366    36,165
                         2021      16,017    20,148    36,165
          The  following  Table 2b presents the total number of active employees
        of FIRE used in the projections, assuming a level work  force,  and  the
        cumulative  number  (i.e. net of withdrawals) of Article 14 FIRE Members
        as of each June 30 from 2017 through 2021.
 
                                        TABLE 2b

        A. 10715--A                        11
 
                       June 30   Tier 1 & 2     Tier 3        Total
                         2017       8,581        2,510       11,091
                         2018       7,995        3,096       11,091
                         2019       7,485        3,606       11,091
                         2020       7,001        4,090       11,091
                         2021       6,557        4,534       11,091
 
          STATEMENT  OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
        ary for, and independent of, the New York City  Retirement  Systems  and
        Pension  Funds.  I  am a Fellow of the Society of Actuaries, an Enrolled
        Actuary under the Employee Retirement Income and Security  Act  of  1974
        (ERISA),  a Member of the American Academy of Actuaries, and a Fellow of
        the Conference of Consulting Actuaries. I meet the Qualification  Stand-
        ards  of the American Academy of Actuaries to render the actuarial opin-
        ion contained herein. To the best of my knowledge, the results contained
        herein have been prepared in accordance with generally accepted actuari-
        al principles and procedures and with the Actuarial Standards  of  Prac-
        tice issued by the Actuarial Standards Board.
          FISCAL  NOTE  IDENTIFICATION:  This  Fiscal Note 2018-31 dated May 30,
        2018, was prepared by the Chief Actuary for the  New  York  City  Police
        Pension  Fund and the New York City Fire Pension Fund.  This estimate is
        intended for use only during the 2018 Legislative Session.
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