STATE OF NEW YORK
________________________________________________________________________
10716--B
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 --
again reported from said committee with amendments, 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
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14770-16-8
A. 10716--B 2
1 no longer apply with respect to the employees of such employer who ther-
2 eafter first join or rejoin a public retirement system.
3 § 2. Section 1200 of the retirement and social security law, as added
4 by section 1 of part A of chapter 504 of the laws of 2009, is amended to
5 read as follows:
6 § 1200. Definitions. For purposes of this article the terms:
7 a. "Member" shall mean a person who is employed as a police officer or
8 firefighter by any employer other than the city of New York who first
9 joins [the] a retirement system on or after January first, two thousand
10 ten or a police/fire member, as that term is defined in section five
11 hundred one of this chapter, who has made an election, pursuant to
12 subdivision b or c of section twelve hundred five of this article, to be
13 subject to the provisions of this article.
14 b. "Retirement system" shall mean the New York state and local police
15 and fire retirement system, the New York city police pension fund, or
16 the New York city fire department pension fund.
17 § 3. Section 1201 of the retirement and social security law, as added
18 by section 1 of part A of chapter 504 of the laws of 2009, is amended to
19 read as follows:
20 § 1201. Applicability. Notwithstanding any provision of law to the
21 contrary, the provisions of this article shall be applicable to all
22 [employees in the retirement system who first joined such system on or
23 after January first, two thousand ten] members of a retirement system as
24 those terms are defined in section twelve hundred of this article.
25 § 4. Section 1202 of the retirement and social security law is
26 amended by adding a new subdivision d to read as follows:
27 d. Notwithstanding anything to the contrary in any other law, the
28 amount of the vested retirement benefit for any member who has made an
29 election to be subject to the provisions of this article pursuant to
30 subdivision b or c of section twelve hundred five of this article, shall
31 be equal to one-sixtieth of the member's final average salary on the
32 date of his or her discontinuance of service, multiplied by a number
33 equal to the number of years of service credited to the member on the
34 date of such discontinuance.
35 § 5. Section 1203 of the retirement and social security law, as added
36 by section 1 of part A of chapter 504 of the laws of 2009, is amended to
37 read as follows:
38 § 1203. Overtime. A member's final average salary shall be calculated
39 in accordance with such provisions of article eight or article eleven of
40 this chapter as govern the member's benefits, except that earnings clas-
41 sified as overtime compensation in an amount in excess of fifteen
42 percent of a member's annual wages not classified as overtime compen-
43 sation shall be excluded from such calculation. "Overtime compensation"
44 shall mean, for purposes of this section, compensation paid under any
45 law or policy under which employees are paid at a rate greater than
46 their standard rate for additional hours worked beyond those required,
47 including compensation paid under section one hundred thirty-four of the
48 civil service law and section ninety of the general municipal law. The
49 provisions of this section limiting earnings classified as overtime
50 compensation shall not apply to a police/fire member, as that term is
51 defined in section five hundred one of this chapter, who has made an
52 election pursuant to subdivision b or c of section twelve hundred five
53 of this article to be subject to the provisions of this article and is
54 employed by either the New York city police department as a detective or
55 at a rank of sergeant or higher or the fire department of the city of
56 New York at a rank of lieutenant or higher.
A. 10716--B 3
1 § 6. Section 1204 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 § 1204. Member contributions. Members who are subject to the
5 provisions of this article shall contribute three percent of annual
6 wages to the retirement system in which they have membership, except
7 that beginning April first, two thousand thirteen for members who first
8 become members of the New York state and local police and fire retire-
9 ment system on or after April first, two thousand twelve; for members
10 who have made an election to be subject to the provisions of this arti-
11 cle pursuant to subdivision b of section twelve hundred five of this
12 article, beginning on the date that such election is filed with the
13 administrative head of the retirement system; and for members who have
14 made an election to be subject to the provisions of this article pursu-
15 ant to subdivision c of section twelve hundred five of this article,
16 beginning on the date that the member joins the retirement system, the
17 rate at which each such member shall contribute in any current plan year
18 (April first to March thirty-first) shall be determined by reference to
19 the wages of such member in the second plan year (April first to March
20 thirty-first) preceding such current plan year as follows:
21 a. members with wages of forty-five thousand dollars per annum or less
22 shall contribute three per centum of annual wages;
23 b. members with wages greater than forty-five thousand per annum, but
24 not more than fifty-five thousand per annum shall contribute three and
25 one-half per centum of annual wages;
26 c. members with wages greater than fifty-five thousand per annum, but
27 not more than seventy-five thousand per annum shall contribute four and
28 one-half per centum of annual wages;
29 d. members with wages greater than seventy-five thousand per annum but
30 not more than one hundred thousand per annum shall contribute five and
31 three-quarters per centum of annual wages; and
32 e. members with wages greater than one hundred thousand per annum
33 shall contribute six per centum of annual wages.
34 Notwithstanding the foregoing, during each of the first three plan
35 years (April first to March thirty-first) in which such member has
36 established membership in [the New York state and local police and fire]
37 a retirement system, such member shall contribute a percentage of annual
38 wages in accordance with the preceding schedule based upon a projection
39 of annual wages provided by the employer. Effective April first, two
40 thousand twelve, all members subject to the provisions of this article
41 shall not be required to make member contributions on annual wages
42 excluded from the calculation of final average salary pursuant to
43 section [1203] twelve hundred three of this article. Nothing in this
44 section, however, shall be construed or deemed to allow members to
45 receive a refund of any member contributions on such wages paid prior to
46 April first, two thousand twelve.
47 Members who are enrolled in a retirement plan that limits the amount
48 of creditable service a member can accrue shall not be required to make
49 contributions pursuant to this section after accruing the maximum amount
50 of service credit allowed by the retirement plan in which they are
51 enrolled. The state comptroller, or for the New York city police pension
52 fund and the New York city fire department pension fund, the board of
53 trustees, shall promulgate such regulations as may be necessary and
54 appropriate with respect to the deduction of such contribution from
55 members' wages and for the maintenance of any special fund or funds with
56 respect to amounts so contributed. In no way shall the member contrib-
A. 10716--B 4
1 utions made pursuant to this section be used to provide for pension
2 increases or annuities of any kind.
3 § 7. Section 1205 of the retirement and social security law, as added
4 by section 1 of part A of chapter 504 of the laws of 2009, is amended to
5 read as follows:
6 § 1205. Recalculation of benefits. a. Notwithstanding any other
7 provision of law, any member who has joined the New York state and local
8 police and fire retirement system pursuant to the provisions of article
9 fourteen of this chapter on or after July first, two thousand nine may
10 elect to have his or her retirement benefits calculated pursuant to this
11 article by filing within one hundred twenty days of the effective date
12 of [this section] the chapter of the laws of two thousand eighteen that
13 amended this subdivision a request for such calculation with the retire-
14 ment system in the form and manner prescribed by the state comptroller.
15 b. Notwithstanding any provision of law to the contrary, any
16 police/fire member, as that term is defined in section five hundred one
17 of this chapter who joined the New York state and local police and fire
18 retirement system between July first, two thousand nine and December
19 thirty-first, two thousand ten, or who joined the New York city police
20 pension fund or the New York city fire department pension fund between
21 July first, two thousand nine and the effective date of this subdivision
22 may make an irrevocable election that shall be duly executed and filed
23 with the administrative head of the retirement system no later than one
24 hundred twenty days after the effective date of this subdivision to be
25 subject to the provisions of this article and have his or her retirement
26 benefits calculated pursuant to this article. Nothing in this subdivi-
27 sion, however, shall be construed or deemed to allow a police/fire
28 member who makes an irrevocable election pursuant to this subdivision to
29 receive a refund of any member contributions for credited service that
30 occurred before the date that such election is filed by a police/fire
31 member with the New York city police pension fund or New York city fire
32 department pension fund, as applicable to such member.
33 c. Notwithstanding any provision of law to the contrary, any
34 police/fire member, as that term is defined in section five hundred one
35 of this chapter, who first becomes a member of the New York city police
36 pension fund or the New York city fire department pension fund after the
37 effective date of this subdivision may make an irrevocable election that
38 shall be duly executed and filed with the administrative head of the
39 retirement system no later than thirty days after joining the retirement
40 system to be subject to the provisions of this article and have his or
41 her retirement benefits calculated pursuant to this article.
42 § 8. Section 1206 of the retirement and social security law, as added
43 by section 1 of part A of chapter 504 of the laws of 2009, is amended to
44 read as follows:
45 § 1206. Conflicting provisions. Except as otherwise provided in this
46 article, or in conflict therewith, the provisions of article eleven of
47 this chapter and title thirteen of the administrative code of the city
48 of New York, including any plan that has been elected by the employer or
49 is otherwise applicable under article eight of this chapter or title
50 thirteen of the administrative code of the city of New York shall govern
51 the retirement benefits provided under this article. In the event of any
52 conflict between the provisions of this article and any other provision
53 of law, this article shall govern.
54 § 9. Paragraph 2 of subdivision a of section 1207 of the retirement
55 and social security law, as added by chapter 303 of the laws of 2017, is
56 amended to read as follows:
A. 10716--B 5
1 2. A member who first joins such system on or after January first, two
2 thousand eighteen in active service who has credit for at least one year
3 of member service may borrow, no more than once during each twelve month
4 period, an amount, not less than one thousand dollars and which would
5 not cause the balance owed pursuant to this section, including any
6 amounts borrowed then outstanding, to exceed (i) fifty percent of the
7 member's total contributions made pursuant to section [five hundred
8 seventeen of this chapter] twelve hundred four of this article or any
9 other article of this chapter (including interest credited at the rate
10 set forth in subdivision c of [such] section five hundred seventeen of
11 this chapter compounded annually); or (ii) fifty thousand dollars,
12 whichever is less.
13 § 10. Section 1209 of the retirement and social security law, as added
14 by chapter 18 of the laws of 2012, is amended to read as follows:
15 § 1209. Final average salary. For members who first become members of
16 the New York state and local police and fire retirement system on or
17 after April first, two thousand twelve, and members who have made an
18 election to be subject to the provisions of this article pursuant to
19 subdivision b or c of section twelve hundred five of this article, a
20 member's final average salary shall be equal to one-fifth of the highest
21 total wages earned by such member during any continuous period of
22 employment for which the member was credited with five years of service
23 credit; provided, however, if the wages earned during any year of cred-
24 ited service included in the period used to determine final average
25 salary exceeds the average of the wages of the previous four years of
26 credited service by more than ten percent, the amount in excess of ten
27 percent shall be excluded from the computation of final average salary.
28 Wages in excess of the annual salary paid to the governor pursuant to
29 section three of article four of the state constitution shall be
30 excluded from the computation of final average salary for members who
31 first become members of the New York state and local police and fire
32 retirement system on or after April first, two thousand twelve,
33 provided, however, that such exclusion of wages from the computation of
34 final average salary shall not apply to a police/fire member, as that
35 term is defined in section five hundred one of this chapter, who has
36 made an election pursuant to subdivision b of section twelve hundred
37 five of this chapter to be subject to the provisions of this article and
38 is employed by either the New York city police department as a detective
39 or at a rank of sergeant or higher or the fire department of the city of
40 New York at a rank of lieutenant or higher.
41 § 11. Section 1210 of the retirement and social security law, as added
42 by chapter 18 of the laws of 2012, is amended to read as follows:
43 § 1210. Wages. For members who first become members of the New York
44 state and local police and fire retirement system on or after April
45 first, two thousand twelve, and members who have made an election to be
46 subject to the provisions of this article pursuant to subdivision b or c
47 of section twelve hundred five of this article, the following items
48 shall not be included in the definition of wages: a. wages in excess of
49 the annual salary paid to the governor pursuant to section three of
50 article four of the state constitution, provided, however, that such
51 exclusion of wages shall not apply to a police/fire member who is
52 employed by either the New York city police department as a detective or
53 at a rank of sergeant or higher or the fire department of the city of
54 New York at a rank of lieutenant or higher, b. lump sum payments for
55 deferred compensation, sick leave, accumulated vacation or other credits
56 for time not worked, c. any form of termination pay, d. any additional
A. 10716--B 6
1 compensation paid in anticipation of retirement, and e. in the case of
2 employees who receive wages from three or more employers in a twelve
3 month period, the wages paid by the third and each successive employer.
4 § 12. 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.
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 of Current Plans) to voluntarily elect, within
certain time periods, a new retirement plan. The proposed legislation
would provide these members with benefits, subject to applicable 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
Accidental 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, except for certain superior officers that include New York
City Police Department at a rank of Detective or above, on pensionable
A. 10716--B 7
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 vested 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 Plan 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:
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.
A. 10716--B 8
* 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 benefits
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 benefit calcu-
lations between the Article 14 Plans and the Article 22 Plan are summa-
rized 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.
Police members in the rank of Detective or above, and Fire Members in
the rank of Lieutenant or above, would not be subject to either the
salary or overtime cap for purposes of determining contributions and
FAS.
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 Proposed Plan, all members are subject to a FAS5 for all
retirement benefits, and if the wages earned in one year of the FAS
A. 10716--B 9
exceed the average of the previous four years by more than 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 of 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 of 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 multiplied 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:
* 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 $1,000, and a death gamble for those with 20 or more
years of service. A death gamble is a lump sum present value equivalent
of a presumed lifetime service retirement benefit of the deceased
member.
ADB Calculation:
* The ADB calculation, aside from the FAS applied, is essentially the
same in the Current and Proposed Plans comprised of 50% of salary and
the Special Accidental Death Benefit (SADB), which, when combined with
the ADB, is approximately 100% of a determined salary.
FINANCIAL IMPACT - CHANGES IN PROJECTED EMPLOYER CONTRIBUTIONS: In
accordance with ACCNY Section 13-638.2(k-2), new Unfunded Accrued
Liability (UAL) attributable to benefit changes are to be amortized as
A. 10716--B 10
determined by the Actuary but generally over the remaining working life-
time of those impacted by the benefit changes. As of June 30, 2017, if
this proposed legislation is enacted, the remaining working lifetime of
Article 14 POLICE and FIRE members, assuming Article 22 Plan partic-
ipation, is approximately 15 years and 21 years, respectively.
For this proposed legislation the change in UAL was amortized over a
15-year period (14 payments under the OYLM) for POLICE and over a
21-year period (20 payments under the OYLM) for FIRE using level dollar
payments.
Since it cannot be precisely determined how many Article 14 POLICE and
FIRE Members will elect to participate in the Article 22 Plan, results
are shown assuming that all existing and incoming Article 14 POLICE and
FIRE Members will elect to participate in the Article 22 Plan.
The following Table 1 presents an estimate of the increases in the
employer contributions to POLICE and FIRE for Fiscal Years 2019 through
2023 due to the changes in provisions for Article 22 POLICE and FIRE
Members based on the applicable actuarial assumptions and methods noted
herein:
Table 1
Fiscal Year Increase in Employer Contributions*
($ Millions)
2019 $24.3
2020 30.2
2021 36.2
2022 42.2
2023 48.6
* 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:
* 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
A. 10716--B 11
contributions of POLICE and FIRE with the exception of the overtime
assumption used for POLICE which was adjusted to reflect the higher
levels of overtime earned by Detectives. 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
________________________________________________________________________
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
________________________________________________________________________
A. 10716--B 12
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 2018-36 dated June 12,
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.
