STATE OF NEW YORK
________________________________________________________________________
8226
2021-2022 Regular Sessions
IN ASSEMBLY
August 25, 2021
___________
Introduced by M. of A. STECK -- read once and referred to the Committee
on Governmental Employees
AN ACT to amend the retirement and social security law, the education
law and the administrative code of the city of New York, in relation
to providing cost-of-living adjustments
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 78-a of the retirement and social
2 security law, as added by chapter 125 of the laws of 2000, is amended to
3 read as follows:
4 c. Said cost-of-living adjustment shall be computed on a base benefit
5 amount not to exceed eighteen thousand dollars of the annual retirement
6 allowance defined in subdivision b of this section. Effective on the
7 first day of September, two thousand twenty-two, said cost-of-living
8 adjustment shall be computed on a base benefit amount not to exceed
9 twenty-one thousand dollars of the annual retirement allowance defined
10 in subdivision b of this section.
11 § 2. Subdivision c of section 378-a of the retirement and social secu-
12 rity law, as added by chapter 125 of the laws of 2000, is amended to
13 read as follows:
14 c. Said cost-of-living adjustment shall be computed on a base benefit
15 amount not to exceed eighteen thousand dollars of the annual retirement
16 allowance defined in subdivision b of this section. Effective on the
17 first day of September, two thousand twenty-two, said cost-of-living
18 adjustment shall be computed on a base benefit amount not to exceed
19 twenty-one thousand dollars of the annual retirement allowance defined
20 in subdivision b of this section.
21 § 3. Subdivision c of section 532-a of the education law, as added by
22 chapter 125 of the laws of 2000, is amended to read as follows:
23 c. Said cost-of-living adjustment shall be computed on a base benefit
24 amount not to exceed eighteen thousand dollars of the annual retirement
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD04154-02-1
A. 8226 2
1 allowance defined in subdivision b of this section. Effective on the
2 first day of September, two thousand twenty-two, said cost-of-living
3 adjustment shall be computed on a base benefit amount not to exceed
4 twenty-one thousand dollars of the annual retirement allowance defined
5 in subdivision b of this section.
6 § 4. Subdivision c of section 13-696 of the administrative code of the
7 city of New York, as added by chapter 125 of the laws of 2000, is
8 amended to read as follows:
9 c. Said cost-of-living adjustment shall be computed on a base benefit
10 amount not to exceed eighteen thousand dollars of the annual fixed
11 retirement allowance defined in subdivision b of this section. Effec-
12 tive on the first day of September, two thousand twenty-two, said cost-
13 of-living adjustment shall be computed on a base benefit amount not to
14 exceed twenty-one thousand dollars of the annual retirement allowance
15 defined in subdivision b of this section.
16 § 5. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend the City of New
York's (City) Cost of Living Adjustment (COLA) provision in 13-696(c) to
raise the base retirement allowance benefit cap amount, used for the
COLA calculation, from $18,000 to $21,000.
This proposed legislation would impact 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
City Fire Pension Fund (FIRE), collectively known as the New York City
Retirement Systems and Pension Funds (NYCRS).
Effective Date: Upon enactment and applicable to the September 2022
COLA.
IMPACT ON BENEFITS: Certain NYCRS retirees and beneficiaries are
eligible to receive a COLA pursuant to the Administrative Code of the
City of New York (ACCNY) Section 13-696(a) (i.e. age 62 and retired for
five years; age 55 and retired for 10 years; disabled retirees who are
retired for five years; and accidental death benefit recipients who have
been receiving the benefit for five years).
Currently, COLA is 50% of the Consumer Price Index, rounded to the
next higher 0.1%, but not to exceed 3% and not less than 1%, applied to
the first $18,000 of the maximum retirement allowance as adjusted with
prior COLAs.
Spouses paid under a lifetime optional benefit receive 50% of the COLA
that would have been payable to the retiree.
Under the proposed legislation, if enacted, the COLA percentage would
be applied to the first $21,000 of the maximum retirement allowance.
FINANCIAL IMPACT: The estimated financial impact of increasing the
base retirement allowance benefit cap amount, used for the COLA calcu-
lation as described above is an increase in the Present Value of Future
Benefits (PVFB) of $1.2 billion and an increase in the annual employer
contributions of $858.5 million. A breakdown of the financial impact by
NYCRS is shown in the table below.
Additional Estimated First Year
NYCRS Present Value Annual Employer
of Future Benefits Contributions
($ Millions) ($ Millions)
NYCERS $502.7 $355.6
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NYCTRS 347.9 237.2
BERS 27.9 15.2
POLICE 229.9 191.2
FIRE 75.059.3
Total $1,183.4 $858.5
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. For purposes of this
Fiscal Note it has been assumed that increases in the UAL attributable
to current retirees would be recognized immediately and that increases
in the UAL attributable to active members would be amortized over peri-
ods ranging from 12 to 15 years depending on the NYCRS (11 to 14
payments under the One-Year Lag Methodology (OYLM)).
CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is
assumed that the changes in the Present Value of future employer
contributions and annual employer contributions would be reflected for
the first time in the June 30, 2020 actuarial valuations of NYCRS. In
accordance with the OYLM used to determine employer contributions, the
increase in employer contributions would first be reflected in Fiscal
Year 2022.
CENSUS DATA: The estimates presented herein are based on the census
data used in the June 30, 2020 (Lag) actuarial valuations of NYCRS to
determine the Preliminary Fiscal Year 2022 employer contributions.
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, 2019
(Lag) actuarial valuations used to determine the Preliminary Fiscal Year
2021 employer contributions of each respective NYCRS.
The Actuary is proposing a set of changes for use beginning with the
June 30, 2019 (Lag) actuarial valuations of NYCRS to determine the
respective Final Fiscal Year 2021 Employer Contributions (2021 A&M). If
the 2021 A&M is enacted it is estimated that it would produce PVFB and
annual employer contribution results that are approximately 6-8% less
than the results shown above.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the actuarial assumptions and methods used and are subject to
change based on the realization of potential investment, demographic,
contribution, and other risks. If actual experience deviates from actu-
arial 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 NYCRS and other
New York City agencies to implement the proposed legislation.
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
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, a
Member of the American Academy of Actuaries, and a Fellow of the Confer-
ence of Consulting Actuaries. I meet the Qualification Standards of the
American Academy of Actuaries to render the actuarial opinion contained
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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 2021-52 dated June 14,
2021 was prepared by the Chief Actuary for the New York City Employees'
Retirement System, the New York City Teachers' Retirement System, the
New York City Board of Education Retirement System, the New York City
Police Pension Fund, and the New York City Fire Pension Fund. This esti-
mate is intended for use only during the 2021 Legislative Session.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill (legislative bill draft 04154-01-1) would amend subdivision
c of Section 532-a of the Education Law to prospectively apply the cost-
of-living adjustment (COLA) percentage to a base benefit amount not to
exceed $21,000 of the annual retirement allowance. The current cap on
the annual base benefit amount is $18,000. This benefit improvement
would be effective in September 2022.
The annual cost to the employers of members of the New York State
Teachers Retirement System for this benefit is estimated to be $83.1
million or .48% of payroll if this bill is enacted.
Member data is from the System's most recent actuarial valuation
files, consisting of data provided by the employers to the Retirement
System. Data distributions and statistics can be found in the System's
Annual Report. System assets are as reported in the System's financial
statements, and can also be found in the System's Annual Report. Actu-
arial assumptions and methods are provided in the System's Actuarial
Valuation Report.
The source of this estimate is Fiscal Note 2021-34 dated June 1, 2021
prepared by the Actuary of the New York State Teachers Retirement System
and is intended for use only during the 2021 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 provide an increase in the defined benefit cost-of-
living adjustment (COLA) for New York public retirement systems. Start-
ing with a payment in September 2022, the annual cost of living adjust-
ment will be computed on a base benefit amount not to exceed $21,000.
Insofar as this bill affects the New York State and Local Employees'
Retirement System, pursuant to Section 25 of the Retirement and Social
Security Law, the increased costs would be borne entirely by the State
of New York and would require an itemized appropriation sufficient to
pay the cost of the provision. If this bill were enacted, the increase
in the present value of benefits would be approximately $1.06 billion.
Insofar as this bill affects the New York State and Local Police and
Fire Retirement System (PFRS), the increased costs would be shared by
the State of New York and the participating employers in the PFRS. If
this bill were enacted, the increase in the present value of benefits
would be approximately $145 million. The estimated first year cost would
be approximately $3.1 million to the State of New York and approximately
$13 million to the participating employers in the PFRS.
Summary of relevant resources:
Membership data as of March 31, 2020 was used in measuring the impact
of the proposed change, the same data used in the April 1, 2020 actuari-
al valuation. Distributions and other statistics can be found in the
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2020 Report of the Actuary and the 2020 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2020
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, 2020
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 fiscal note does not constitute a legal opinion on the viability
of the proposed change nor is it intended to serve as a substitute for
the professional judgment of an attorney.
This estimate, dated March 19, 2021, and intended for use only during
the 2021 Legislative Session, is Fiscal Note No. 2021-106, prepared by
the Actuary for the New York State and Local Retirement System.
