STATE OF NEW YORK
________________________________________________________________________
10538
IN ASSEMBLY
July 6, 2022
___________
Introduced by COMMITTEE ON RULES -- (at request of M. of A. Wallace,
Buttenschon) -- read once and referred to the Committee on Govern-
mental Employees
AN ACT to amend the retirement and social security law, in relation to
enacting the "State Police Retention act"
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 "State Police Retention act".
3 § 2. Legislative findings. Front line public employees have faced
4 unprecedented adverse health effects as the result of employer mandates
5 to require state police officers to remain on-duty and physically pres-
6 ent at their work locations during the deadly COVID-19 pandemic. These
7 crucial public employees mandated to continue conducting crucial
8 services to the public during the most deadly period of the COVID-19
9 pandemic displayed exemplary service, while often at a health detriment
10 to the employee and their family. Prior to the state mandating worker
11 quarantines, state police officers were already on the front lines of
12 the pandemic transporting crucial medical supplies, test kits as well as
13 COVID-19 samples throughout the state to laboratories established to
14 test suspected COVID-19 submissions in order to gain an early foothold
15 in statewide treatment protocols. Besides the strenuous work they
16 already perform, additional duties as part of the early tracking, trans-
17 porting and testing of COVID-19 samples has resulted in a large contin-
18 gent of state police officers to retire earlier than expected and thus
19 reduced overall manpower allotments that does not keep up with mandated
20 duty requirements. This legislation offers an inducement to retain our
21 most valued senior state police officers while affording more time to
22 hire, train and deploy replaced public employees.
23 § 3. The retirement and social security law is amended by adding a new
24 section 381-c to read as follows:
25 § 381-c. Deferred retirement option plan payable to members and offi-
26 cers of the division of state police. a. Deferred retirement option
27 plan. Deferred retirement option plan, (hereinafter referred to as
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD15385-02-2
A. 10538 2
1 "DROP"), is a retirement plan under which an eligible member may elect
2 to participate, deferring receipt of retirement benefits while continu-
3 ing employment with the division of state police. For the purposes of
4 this section, an "eligible member" is any member or officer employed by
5 the division of state police. During the period of continued employment,
6 the eligible member's monthly retirement benefit shall be deferred and
7 held by the retirement system on behalf of the member plus interest at
8 an effective rate of one and one-half percent for the specific period of
9 participation in DROP as provided in subdivision c of this section. Upon
10 completion of the DROP period, the eligible member shall receive the
11 total amount of retirement benefits deferred under DROP without optional
12 modification as permitted by subdivisions d and e of this section and
13 shall begin to receive the previously determined normal service retire-
14 ment benefit with optional modification as further provided in subdivi-
15 sion d of this section.
16 b. Participation in DROP. Any eligible member who is currently
17 employed by the division of state police and qualifies to retire pursu-
18 ant to section three hundred eighty-one-b of this title by reason of
19 completing twenty years of creditable service may elect to participate
20 in DROP.
21 c. Election in DROP. Such election shall be on a form prepared by the
22 comptroller and may be for any period of time not less than twelve
23 months or more than sixty months duration. Any member who elects to
24 participate in DROP shall be considered retired on the day following the
25 expiration of the DROP period, provided, however, that all loans and
26 excess contributions shall be resolved by the date of entry into DROP
27 and no additional loans or excess contributions shall be permitted after
28 the date of entry into DROP. Upon expiration of the time period selected
29 by the eligible member, such member's participation in DROP shall termi-
30 nate.
31 d. Benefits payable under DROP. (1) Effective with the date of partic-
32 ipation in DROP, the eligible member's normal service retirement benefit
33 shall be calculated, using creditable service and final average salary
34 as if the effective date of retirement was the date of entry into DROP.
35 The amount deferred pursuant to DROP shall be calculated based upon the
36 eligible member's zero option retirement allowance until such member has
37 obtained the applicable maximum service retirement limit based upon
38 years of service. Any additional participation in DROP after a member
39 has obtained the maximum service retirement limit based upon years of
40 service shall be calculated based upon sixty percent of the member's
41 full annual retirement allowance. In addition, for the purposes of this
42 section, the annual retirement allowance for any member electing DROP
43 shall be calculated using a three-year final average salary as defined
44 elsewhere in this article. The eligible member shall, however, elect his
45 or her optional retirement benefit at the completion of the DROP period.
46 (2) If the eligible member dies prior to completion of the period of
47 participation in DROP, the eligible member shall be treated as if such
48 DROP election did not exist. In lieu of the DROP payment, a death bene-
49 fit shall be payable consistent with the terms of this chapter and all
50 salary and service reported for such eligible member during the DROP
51 period shall be considered in calculating the eligible member's death
52 benefit.
53 (3) If the eligible member is approved for disability benefits
54 provided in this chapter during the DROP period, the eligible member
55 shall be treated as if the DROP election did not exist. In lieu of the
56 DROP payment, a disability retirement benefit shall be payable consist-
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1 ent with the terms of this chapter and all salary and service reported
2 for such eligible member during the DROP period shall be considered in
3 calculating the eligible member's disability retirement benefit.
4 (4) If an eligible member otherwise fails to complete his or her peri-
5 od of service as elected pursuant to subdivision c of this section, the
6 eligible member shall be treated as if such DROP election did not exist.
7 In lieu of the DROP payment, the normal service retirement benefit shall
8 be payable consistent with the terms of this chapter and all salary and
9 service reported for such eligible member during the DROP period shall
10 be considered in calculating the eligible member's service retirement
11 benefit.
12 (5) If an eligible member remains employed after his or her partic-
13 ipation in DROP is terminated, such member shall forfeit all DROP bene-
14 fits and continue employment as if such DROP election did not exist.
15 Such member shall then be eligible to elect DROP consistent with the
16 terms of this section.
17 (6) If an eligible member is approved for disability benefits after
18 benefits payable pursuant to DROP have been paid, the eligible member
19 may elect to receive the disability benefits in lieu of DROP benefits,
20 but such disability benefits shall be actuarially adjusted for any bene-
21 fits paid under DROP.
22 e. Method of payment. At the conclusion of the member's participation
23 in DROP, the retirement system shall pay the deferred service retirement
24 benefits in one of the following methods as elected by the member:
25 (1) Lump sum: All accrued DROP benefits, plus interest, less withhold-
26 ing as required by the internal revenue service, shall be paid to the
27 DROP participant or eligible beneficiary or as otherwise determined by
28 operation of law;
29 (2) Direct rollover: All accrued DROP benefits, plus interest, shall
30 be paid from the retirement system to a custodian of the eligible
31 retirement plan or other eligible plan or account as provided pursuant
32 to the internal revenue code as directed by the member or eligible bene-
33 ficiary;
34 (3) Partial lump sum: A portion of the DROP benefits shall be paid to
35 the DROP participant or eligible beneficiary, less withholding required
36 by the internal revenue service and the remaining DROP benefits may be
37 rolled over as otherwise permitted by the internal revenue code.
38 For purposes of this subdivision, the term "eligible beneficiary" is
39 one who qualifies to rollover benefits from a qualified benefit plan or
40 account as provided by the internal revenue code. The forms of payment
41 provided by this subdivision shall comply with the minimum distribution
42 requirements of the internal revenue code.
43 f. Regulations. The comptroller shall prescribe such rules and regu-
44 lations as may be necessary for the effective administration and imple-
45 mentation of the provisions of this section.
46 § 4. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would allow police officers employed by the division of
state police to elect to participate in a Deferred Retirement Option
Plan (DROP), deferring receipt of retirement benefits while continuing
their current employment. The features of this DROP are:
1. Members may elect to participate in the DROP upon the attainment of
retirement eligibility.
2. The service retirement benefit shall be the option zero allowance
determined based on the service and final average salary at the
commencement of DROP participation. However, once a member's total
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service credit (including service during the DROP period) exceeds 32
years, the monthly payment into the DROP account will be limited to 60%
of the option zero allowance.
3. The Police and Fire Retirement System (PFRS) shall consider DROP
participants active members, and annual employer contributions shall
continue to be made by the State of New York to the PFRS on behalf of
such members.
4. The length of participation in the DROP must be specified at the
time of election, and may not be less than 1 year, nor exceed 5 years.
However, if the affected member should leave employment before or after
the scheduled DROP termination date, such member shall forfeit all DROP
benefits, and shall be treated as though there were no DROP election.
5. During the DROP period, the monthly pensions of such participants
will be deferred and held by the PFRS on their behalf and shall accrue
interest at 1.5%. Such account, with interest accumulation, must be
distributed in full at the end of the specified DROP period.
6. If an affected member should die or become disabled during the DROP
period, such member would be treated as though there were no DROP
election.
7. Upon termination from DROP, such participants shall receive their
deferred payments, and shall also begin to receive their previously
determined pensions.
Section 212 of the Retirement and Social Security Law generally
requires the immediate suspension of the service retirement benefit in
the event a retiree under age 65 returns to public employment and earns
in any calendar year an amount greater than $35,000. This proposal
would allow members to receive both their full salary and retirement
benefits for up to a 5-year period.
The Partial Lump Sum (PLS) program currently allows PFRS members to
receive lump sums equal to 25% of the present value of their pensions.
Under this proposal, certain members could receive lump sums which would
exceed 40% of the present value of their pensions, in addition to the
PLS lump sums.
If this bill is enacted, there would be past service costs which would
depend on the current salary, age and length of service of the affected
members. It is estimated that the past service cost per member would
average approximately 100% of salary. This cost would be billed to the
State of New York when a state police officer receives their DROP
payout.
If the anticipated retirement experience of members who are eligible
for this benefit changes significantly in the future, there would be
additional increases in employer costs.
Summary of relevant resources:
Membership data as of March 31, 2021 was used in measuring the impact
of the proposed change, the same data used in the April 1, 2021 actuari-
al valuation. Distributions and other statistics can be found in the
2021 Report of the Actuary and the 2021 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2020
and 2021 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, 2021
New York State and Local Retirement System Financial Statements and
Supplementary Information.
A. 10538 5
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 May 12, 2022, and intended for use only during
the 2022 Legislative Session, is Fiscal Note No. 2022-132, prepared by
the Actuary for the New York State and Local Retirement System.
