STATE OF NEW YORK
________________________________________________________________________
10373
IN ASSEMBLY
May 13, 2022
___________
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Abbate) --
read once and referred to the Committee on Governmental Employees
AN ACT to amend the administrative code of the city of New York, in
relation to the pensionable earnings of first grade police officers
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 14-111 of the administrative code of the city of
2 New York is amended by adding two new subdivisions c and d to read as
3 follows:
4 c. When a first grade police officer shall have served in the rank of
5 police officer for a period of twenty-five years, he or she shall have
6 the same rights in respect to the police pension fund as a police offi-
7 cer designated to act as detective of the third grade who shall have
8 served as such for a period of time aggregating two years at the highest
9 salary rate for a detective of the third grade.
10 d. When a first grade police officer shall have served in the rank of
11 police officer for a period of thirty years, he or she shall have the
12 same rights in respect to the police pension fund as a sergeant who
13 shall have served as such for a period of time aggregating two years at
14 the highest salary rate for a sergeant.
15 § 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend Section 14-111
of the Administrative Code of the City of New York (ACCNY) to allow for
a Police Officer 1st Grade of the New York City Police Department
(NYPD), who has been a Police Officer for at least 25 years, to have the
same rights in respect to the New York City Police Pension Fund (POLICE)
as a Police Officer designated to act as a Detective 3rd Grade by
including, for pension purposes, the highest salary for such Detective
aggregating for two years. This proposed legislation will also allow for
a Police Officer 1st Grade of the NYPD, who has been a Police Officer
for at least 30 years, to have the same rights in respect to POLICE as a
Sergeant by including, for pension purposes, the highest salary for such
Sergeants aggregating for two years.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11440-02-2
A. 10373 2
Effective Date: Upon enactment.
IMPACT ON BENEFITS: The proposed legislation would permit a Police
Officer 1st Grade, who have met certain service requirements, to have
their pension calculations based on a higher salary.
A Police Officer 1st Grade with at least 25 years of service would,
under this proposed legislation, if enacted, receive an increase in
their annual pension benefit of approximately $5,300 per year. A Police
Officer 1st Grade with at least 30 years of service would, under this
proposed legislation, if enacted, receive an increase in their annual
pension benefit of approximately $15,300 per year. This is due to the
assumed higher salary and overtime, and assumes a service retirement
benefit with 25 years and 30 years of service, respectively.
Based on this increase and an estimate of the number of POLICE members
that are expected to be impacted by this change, it is estimated that if
this proposed legislation is enacted, the annual increase in POLICE
pension benefits paid will be approximately $0.7 million per year.
With respect to an individual member, the impact on benefits due to
this proposed legislation could vary greatly depending on the member's
age, years of service, retirement cause, and Tier.
FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial assumptions
and methods described herein, the enactment of this proposed legislation
would increase the Present Value of Future Benefits (PVFB) by approxi-
mately $8.5 million every year.
FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: Enactment of this
proposed legislation would increase employer contributions, where such
amount would depend on the number of members affected as well as other
characteristics including the age, years of service, and salary history
of the member.
Since the number of Police Officers 1st Grade that will retire with 25
or more years of service or Police Officers 1st Grade that will retire
with 30 or more years of service cannot be known in advance with credi-
bility, the PVFB will be financed over the same time period used for
actuarial losses in accordance with Section 13-638.2(k-2) of the Admin-
istrative Code of the City of New York. Using this approach, the addi-
tional UAL would be amortized over a closed 15-year period (14 payments
under the One-Year Lag Methodology (OYLM)) using level dollar payments.
Based on the Actuary's actuarial assumptions and methods described
herein, the enactment of this proposed legislation is estimated to
increase annual employer contributions by approximately $1.0 million
each year.
The costs above represent the estimated impact for retirees in the
first year the bill is enacted. Future years' costs in addition to the
aforementioned cost would depend on the number of retirees who benefit
under the legislation amongst other factors.
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, 2022 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 2024.
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-
ution. To estimate the number of retirees who could potentially benefit
from this proposed legislation, data from the prior actuarial valuations
A. 10373 3
for POLICE was used. Below is a summary of the data from the prior valu-
ations:
* Police Officer 1st Grade who retired with 25-29 years in rank -
875 retired over the past 10 years.
* Police Officer 1st Grade who retired with 30+ years in rank - 155
retired over the past 10 years.
Additional salary data for Police Officers, Detectives, and Sergeants
was provided by POLICE. Below is a summary of the data provided:
* Salary (excluding overtime and outstanding wage contract
increases)
o Police Officer 1st Grade - $101,225
o Detective 3rd Grade - $111,594
o Sergeant - $123,933
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.
Due to the outstanding wage contract for Police Officers, Detectives,
and Sergeants as of the date this Fiscal Note was released, the salaries
provided for this analysis have been adjusted to reflect the assumption
of pattern bargaining based on the first year of the recently settled
Captains Endowment Association contract of 7.95% plus an assumed addi-
tional 3.0% for Police Officers.
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 to implement the
proposed legislation.
* The impact of this proposed legislation on Other Postemploy-
ment Benefit (OPEB) costs.
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 2022-36 dated April 25,
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.
