Provides that service retirement benefits for members of the NYC police pension fund shall not be reduced by the primary social security retirement benefit commencing at age sixty-two.
STATE OF NEW YORK
________________________________________________________________________
9810
IN ASSEMBLY
April 19, 2022
___________
Introduced by M. of A. ABBATE -- read once and referred to the Committee
on Governmental Employees
AN ACT to amend the retirement and social security law, in relation to
service retirement benefits for members of the New York city police
pension fund
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 505 of the retirement and social security law, as
2 amended by chapter 18 of the laws of 2012, is amended to read as
3 follows:
4 § 505. Service retirement benefits; police/fire members, New York city
5 uniformed correction/sanitation revised plan members and investigator
6 revised plan members. a. The normal service retirement benefit for
7 police/fire members, New York city uniformed correction/sanitation
8 revised plan members and investigator revised plan members at normal
9 retirement age shall be a pension equal to fifty percent of final aver-
10 age salary, less fifty percent of the primary social security retirement
11 benefit commencing at age sixty-two, as provided in section five hundred
12 eleven of this article, except that for members of the New York city
13 police pension fund, the normal service retirement benefit shall not be
14 reduced by the primary social security retirement benefit commencing at
15 age sixty-two as provided in section five hundred eleven of this
16 article.
17 b. The early service retirement benefit for police/fire members, New
18 York city uniformed correction/sanitation revised plan members and
19 investigator revised plan members shall be a pension equal to two and
20 one-tenths percent of final average salary times years of credited
21 service at the completion of twenty years of service or upon attainment
22 of age sixty-two, increased by one-third of one percent of final average
23 salary for each month of service in excess of twenty years, but not in
24 excess of fifty percent of final average salary, less fifty percent of
25 the primary social security retirement benefit commencing at age sixty-
26 two as provided in section five hundred eleven of this article,
27 provided, however, that New York city police/fire revised plan members,
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14388-02-2
A. 9810 2
1 New York city uniformed correction/sanitation revised plan members and
2 investigator revised plan members shall not be eligible to retire for
3 service prior to the attainment of twenty years of credited service, and
4 provided further that for members of the New York city police pension
5 fund, the early service retirement benefit shall not be reduced by the
6 primary social security retirement benefit commencing at age sixty-two
7 as provided in section five hundred eleven of this article.
8 c. A police/fire member, a New York city uniformed
9 correction/sanitation revised plan member or an investigator revised
10 plan member who retires with twenty-two years of credited service or
11 less may become eligible for annual escalation of the service retirement
12 benefit if he elects to have the payment of his benefit commence on the
13 date he would have completed twenty-two years and one month or more of
14 service. In such event, the service retirement benefit shall equal two
15 percent of final average salary for each year of credited service, less
16 fifty percent of the primary social security retirement benefit commenc-
17 ing at age sixty-two as provided in section five hundred eleven of this
18 article, except that for members of the New York city police pension
19 fund, the service retirement benefit shall not be reduced by the primary
20 social security retirement benefit commencing at age sixty-two as
21 provided in section five hundred eleven of this article.
22 § 2. Section 511 of the retirement and social security law is amended
23 by adding a new subdivision h to read as follows:
24 h. This section shall not apply to members of the New York city police
25 pension fund who receive a service retirement benefit pursuant to
26 section five hundred five of this article or a deferred vested benefit
27 pursuant to section five hundred sixteen of this article.
28 § 3. Subdivision c of section 516 of the retirement and social securi-
29 ty law, as amended by chapter 18 of the laws of 2012, is amended to read
30 as follows:
31 c. The deferred vested benefit of police/fire members, New York city
32 police/fire revised plan members, New York city uniformed
33 correction/sanitation revised plan members or investigator revised plan
34 members shall be a pension commencing at early retirement age equal to
35 two and one-tenths percent of final average salary times years of cred-
36 ited service, less fifty percent of the primary social security retire-
37 ment benefit commencing at age sixty-two, as provided in section five
38 hundred eleven of this article, except that for members of the New York
39 city police pension fund, the service retirement benefit shall not be
40 reduced by the primary social security retirement benefit commencing at
41 age sixty-two as provided in section five hundred eleven of this
42 article. A police/fire member, a New York city police/fire revised plan
43 member, a New York city uniformed correction/sanitation revised plan
44 member or investigator revised plan member may elect to receive his
45 vested benefit commencing at early retirement age or age fifty-five. If
46 the vested benefit commences before early retirement age, the benefit
47 shall be reduced by one-fifteenth for each year, if any, that the
48 member's early retirement age is in excess of age sixty, and by one-
49 thirtieth for each additional year by which the vested benefit commences
50 prior to early retirement age. If such vested benefit is deferred until
51 after such member's normal retirement age, the benefit shall be computed
52 and subject to annual escalation in the same manner as provided for an
53 early retirement benefit pursuant to subdivision c of section five
54 hundred five of this article.
55 § 4. This act shall take effect on the sixtieth day after it shall
56 have become a law.
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FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend Sections 505,
511, and 516 of the Retirement and Social Security Law (RSSL) to elimi-
nate the offset equal to 50% of the primary social security benefit in
the service, early service, and vested retirement benefits for Tier 3
original, revised, and enhanced plan members of the New York City Police
Pension Fund (POLICE).
Effective Date: Sixty days after enactment.
IMPACT ON BENEFITS: Currently, the Tier 3 normal service retirement,
early service retirement, and vested retirement benefits are subject to
an offset equal to 50% of the primary social security benefit as defined
in RSSL Section 511 beginning at age 62.
Under the proposed legislation, if enacted, the offset for such bene-
fits would be eliminated resulting in an increase in benefits.
FINANCIAL IMPACT - SUMMARY: The financial impact will increase as the
impacted populations of Tier 3 members of POLICE increases over time.
The estimated financial impact of removing the social security offset as
described above results in an increase in Present Value of Future Bene-
fits (PVFB) and an increase in the annual employer contributions of
POLICE. The estimate of these increases for Fiscal Years 2023 through
2027 based on the applicable actuarial assumptions and methods noted
herein, are shown in the table below.
Fiscal Increase in Increase in
Year Present Value of Future Employer Contributions
Benefits ($ Millions) ($ Millions)
2023 $548.6 $40.1
2024 $622.4 $43.8
2025 $706.5 $47.6
2026 $793.6 $51.5
2027 $894.1 $55.8
In accordance with Section 13-638.2(k-2) of the Administrative Code of
the City of New York (ACCNY), new Unfunded Accrued Liability (UAL)
attributable to benefit changes are to be amortized as determined by the
Actuary but are generally amortized over the remaining working lifetime
of those impacted by the benefit changes. As of June 30, 2021, the
remaining working lifetime of POLICE members subject to Article 14 is
approximately 18 years.
For the purposes of this Fiscal Note, the increase in the UAL for
POLICE was amortized over an 18-year period (17 payments under the One-
Year Lag Methodology (OYLM)) using level dollar payments.
CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is
assumed that the changes in the PVFB and annual employer contributions
would be reflected for the first time in the Final June 30, 2021 actuar-
ial valuation of POLICE. In accordance with the OYLM used to determine
employer contributions, the increase in employer contributions would
first be reflected in Fiscal Year 2023.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2021 (Lag) actuarial valuation of
POLICE to determine the Preliminary Fiscal Year 2023 employer contrib-
utions.
The 17,963 active POLICE Tier 3 members as of June 30, 2021 had an
average age of approximately 31.8 years, average service of approximate-
ly 5.3 years, and an average salary of approximately $97,600.
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ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and annual
employer contributions presented herein have been calculated based on
the actuarial assumptions and methods in effect for the June 30, 2021
(Lag) actuarial valuations used to determine the Preliminary Fiscal Year
2023 employer contributions of POLICE.
New entrants were projected to replace the members expected to leave
the active population to maintain a steady-state population. New entrant
demographics and future salary increases are consistent with those that
will be used in projections for the New York City Office of Management
and Budget in April 2022 (Preliminary Projections).
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the realization of the actuarial assumptions used, as well as
certain demographic characteristics of POLICE and other exogenous
factors such as investment, contribution, and other risks. If actual
experience deviates from actuarial assumptions, the actual costs could
differ from those presented herein. Costs are also dependent on the
actuarial methods used, and therefore different actuarial methods could
produce different results. Quantifying these risks is beyond the scope
of this Fiscal Note.
Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of POLICE and other New
York City agencies to implement the proposed legislation.
* Pension costs for future members of POLICE hired on or after
7/1/2025.
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
* Cost analyses relating to provisions contained in RSSL Section
500(c).
STATEMENT OF ACTUARIAL OPINION: I, Michael J. Samet, am the Interim
Chief Actuary for, and independent of, the New York City Retirement
Systems and Pension Funds. I am a Fellow of the Society of Actuaries and
a Member of the American Academy of Actuaries. I meet the Qualification
Standards of the American Academy of Actuaries to render the actuarial
opinion contained herein. To the best of my knowledge, the results
contained herein have been prepared in accordance with generally
accepted actuarial principles and procedures and with the Actuarial
Standards of Practice issued by the Actuarial Standards Board.
FISCAL NOTE IDENTIFICATION: This Fiscal Note 2022-06 dated March 24,
2022 was prepared by the Interim Chief Actuary for the New York City
Police Pension Fund. This estimate is intended for use only during the
2022 Legislative Session.
