Relates to disability benefits for certain members of the New York city police pension fund, the New York city fire department pension fund or the New York city employees' retirement system.
STATE OF NEW YORK
________________________________________________________________________
5705--B
2015-2016 Regular Sessions
IN SENATE
May 29, 2015
___________
Introduced by Sen. KRUEGER -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
-- committee discharged, bill amended, ordered reprinted as amended
and recommitted to said committee -- committee discharged, bill
amended, ordered reprinted as amended and recommitted to said commit-
tee
AN ACT to amend the retirement and social security law, in relation to
disability benefits for certain members of the New York city police
pension fund, the New York city fire department pension fund and the
New York city employees' retirement system
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 506 of the retirement and social security law is
2 amended by adding five new subdivisions e, f, g, h and i to read as
3 follows:
4 e. Notwithstanding the provisions of subdivisions a and b of this
5 section, the ordinary disability benefit for a police/fire member who
6 joined the New York city police pension fund or the New York city fire
7 department pension fund on or after the effective date of this subdivi-
8 sion, or a police/fire member who has elected to receive such benefit
9 pursuant to subdivision g of this section, shall be:
10 1. Except as provided in paragraph three of this subdivision, a
11 pension equal to (i) the greater of (A) two percent of final average
12 salary or sixth-year salary, whichever is greater, times years of cred-
13 ited service not in excess of the maximum years of service for computing
14 service retirement, or (B) thirty-three and one-third percent of final
15 average salary or sixth-year salary, whichever is greater, (ii) less one
16 hundred percent of any workers' compensation benefits payable;
17 2. A cost-of-living adjustment for such pension, which shall be
18 computed in the same manner as provided for by section 13-696 of the
19 administrative code of the city of New York; and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11379-09-5
S. 5705--B 2
1 3. If the ordinary disability benefit as calculated pursuant to para-
2 graphs one and two of this subdivision is less than the ordinary disa-
3 bility benefit as calculated pursuant to subdivision b of this section
4 for any year that such police/fire member is eligible for such benefit,
5 then the ordinary disability benefit calculated pursuant to subdivision
6 b of this section shall be payable.
7 f. Notwithstanding the provisions of subdivisions a and b of this
8 section, the ordinary disability benefit for a New York city uniformed
9 correction/sanitation revised plan member who joined the New York city
10 employees' retirement system on or after the effective date of this
11 subdivision, or a New York city uniformed correction/sanitation revised
12 plan member who has elected to receive such benefit pursuant to subdivi-
13 sion h of this section, shall be:
14 1. Except as provided in paragraph three of this subdivision, a
15 pension equal to (i) the greater of (A) two percent of final average
16 salary or sixth-year salary, whichever is greater, times years of cred-
17 ited service not in excess of the maximum years of service for computing
18 service retirement, or (B) thirty-three and one-third percent of final
19 average salary or sixth-year salary, whichever is greater, (ii) less one
20 hundred percent of any workers' compensation benefits payable;
21 2. A cost-of-living adjustment for such pension, which shall be
22 computed in the same manner as provided for by section 13-696 of the
23 administrative code of the city of New York; and
24 3. If the ordinary disability benefit as calculated pursuant to para-
25 graphs one and two of this subdivision is less than the ordinary disa-
26 bility benefit as calculated pursuant to subdivision b of this section
27 for any year that such New York city uniformed correction/sanitation
28 revised plan member is eligible for such benefit, then the ordinary
29 disability benefit calculated pursuant to subdivision b of this section
30 shall be payable.
31 g. Notwithstanding the provisions of subdivisions a and b of this
32 section, a police/fire member who joined the New York city police
33 pension fund or the New York city fire department pension fund before
34 the effective date of this subdivision and is eligible for the ordinary
35 disability benefit described in subdivision b of this section may at the
36 time of retirement make an election to receive the ordinary disability
37 benefit described in subdivision e of this section. Such election shall
38 be duly executed and filed with the administrative head of the pension
39 fund to which the member belongs and shall be irrevocable. If no such
40 election is made, such member shall receive the ordinary disability
41 benefit described in subdivision b of this section.
42 h. Notwithstanding the provisions of subdivisions a and b of this
43 section, a New York city uniformed correction/sanitation revised plan
44 member who joined the New York city employees' retirement system before
45 the effective date of this subdivision and is eligible for the ordinary
46 disability benefit described in subdivision b of this section may at the
47 time of retirement make an election to receive the ordinary disability
48 benefit described in subdivision f of this section. Such election shall
49 be duly executed and filed with the administrative head of the New York
50 city employees' retirement system and shall be irrevocable. If no such
51 election is made, such member shall receive the ordinary disability
52 benefit described in subdivision b of this section.
53 i. For the purposes of this section, "sixth-year salary" shall mean
54 the sum of the standard rate payable to a police officer, firefighter,
55 correction officer or sanitation worker upon six years of employment as
56 a police officer, firefighter, correction officer or sanitation worker,
S. 5705--B 3
1 excluding any longevity adjustments, and the average overtime compen-
2 sation paid or payable to such police officer, firefighter, correction
3 officer or sanitation worker. For the purposes of this subdivision,
4 "overtime compensation" shall have the same meaning as such term is
5 defined in subdivision twenty-four of section five hundred one of this
6 article. If such police officer, firefighter, correction officer or
7 sanitation worker has been a member of the New York city police pension
8 fund, the New York city fire department fund or the New York city
9 employees' retirement system for less than six years upon the date of
10 his or her retirement, the average overtime compensation shall be calcu-
11 lated as follows:
12 1. If the period of employment prior to the date of retirement is less
13 than one year, the projected first year overtime compensation shall be
14 based upon a twelve month projection of the overtime compensation paid
15 in the portion of the year worked. The average overtime compensation
16 shall be the projected first year overtime compensation.
17 2. If the period of employment prior to the date of retirement is more
18 than one year but less than two years, the projected second year over-
19 time compensation shall be based upon a twelve month projection of the
20 overtime compensation paid in the portion of the second year worked.
21 The average overtime compensation shall be one-sixth the sum of (i) the
22 projected second year overtime compensation multiplied by five and (ii)
23 the actual overtime compensation paid in the first year of employment.
24 3. If the period of employment prior to the date of retirement is more
25 than two years but less than three years, the projected third year over-
26 time compensation shall be based upon a twelve month projection of the
27 overtime compensation paid in the portion of the third year worked. The
28 average overtime compensation shall be one-sixth the sum of (i) the
29 projected third year overtime compensation multiplied by four and (ii)
30 the actual overtime compensation paid in the first two years of employ-
31 ment.
32 4. If the period of employment prior to the date of retirement is more
33 than three years but less than four years, the projected fourth year
34 overtime compensation shall be based upon a twelve month projection of
35 the overtime compensation paid in the portion of the fourth year worked.
36 The average overtime compensation shall be one-sixth the sum of (i) the
37 projected fourth year overtime compensation multiplied by three and (ii)
38 the actual overtime compensation paid in the first three years of
39 employment.
40 5. If the period of employment prior to the date of retirement is more
41 than four years but less than five years, the projected fifth year over-
42 time compensation shall be based upon a twelve month projection of the
43 overtime compensation paid in the portion of the fifth year worked. The
44 average overtime compensation shall be one-sixth the sum of (i) the
45 projected fifth year overtime compensation multiplied by two and (ii)
46 the actual overtime compensation paid in the first four years of employ-
47 ment.
48 6. If the period of employment prior to the date of retirement is more
49 than five years but less tan six years, the projected sixth year over-
50 time compensation shall be based upon a twelve month projection of the
51 overtime compensation paid in the portion of the sixth year worker. The
52 average overtime compensation shall be one-sixth the sum of (i) the
53 projected sixth year overtime compensation and (ii) the actual overtime
54 compensation paid in the first five years of employment.
S. 5705--B 4
1 § 2. Section 507 of the retirement and social security law is amended
2 by adding six new subdivisions c-1, c-2, c-3, c-4, c-5 and c-6 to read
3 as follows:
4 c-1. Notwithstanding the provisions of subdivisions a and c of this
5 section, the accidental disability benefit for a police/fire member who
6 joined the New York city police pension fund or the New York city fire
7 department pension fund on or after the effective date of this subdivi-
8 sion, or a police/fire member who has elected to receive such benefit
9 pursuant to subdivision c-3 of this section, shall be:
10 1. Except as provided in paragraph three of this subdivision, a
11 pension equal to (i) the greater of (A) fifty percent of final average
12 salary, (B) fifty percent of sixth-year salary, or (C) for members who
13 meet the requirements set forth in subdivision c-6 of this section, the
14 greater of seventy-five percent of final average salary or seventy-five
15 percent of sixth-year salary, (ii) less one hundred percent of any work-
16 ers' compensation benefits payable; and
17 2. A cost-of-living adjustment for such pension, which shall be
18 computed in the same manner as provided for by section 13-696 of the
19 administrative code of the city of New York.
20 If the accidental disability benefit as calculated pursuant to para-
21 graphs one and two of this subdivision is less than the accidental disa-
22 bility benefit as calculated pursuant to subdivision c of this section
23 for any year that such police/fire member is eligible for such benefit,
24 then the accidental disability benefit calculated pursuant to subdivi-
25 sion c of this section shall be payable.
26 c-2. Notwithstanding the provisions of subdivisions a and c of this
27 section, the accidental disability benefit for a New York city uniformed
28 correction/sanitation revised plan member who joined the new York city
29 employees' retirement system on or after the effective date of this
30 subdivision, or a New York city uniformed correction/sanitation revised
31 plan member who has elected to receive such benefit pursuant to subdivi-
32 sion c-4 of this section, shall be:
33 1. Except as provided in paragraph three of this subdivision, a
34 pension equal to (i) the greater of (A) fifty percent of final average
35 salary, (B) fifty percent of sixth-year salary, or (C) for members who
36 meet the requirements set forth in subdivision c-6 of this section, the
37 greater of seventy-five percent of final average salary or seventy-five
38 percent of sixth-year salary, (ii) less one hundred percent of any work-
39 ers' compensation benefits payable; and
40 2. A cost-of-living adjustment for such pension, which shall be
41 computed in the same manner provided for by section 13-696 of the admin-
42 istrative code of the city of New York.
43 If the accidental disability benefit as calculated pursuant to para-
44 graphs one and two of this subdivision is less than the accidental disa-
45 bility benefit as calculated pursuant to subdivision c of this section
46 for any year that such New York city uniformed correction/sanitation
47 revised plan member is eligible for such benefit, then the accidental
48 disability benefit calculated pursuant to subdivision c of this section
49 shall be payable.
50 c-3. Notwithstanding the provisions of subdivisions a and c of this
51 section, a police/fire member who joined the New York city police
52 pension fund or the New York city fire department pension fund before
53 the effective date of this subdivision and is eligible for the acci-
54 dental disability benefit described in subdivision c of this section may
55 at the time of retirement make an election to receive the accidental
56 disability benefit described in subdivision c-1 of this section. Such
S. 5705--B 5
1 election shall be duly executed and filed with the administrative head
2 of the pension fund to which the member belongs and shall be irrev-
3 ocable. If no such election is made, such member shall receive the acci-
4 dental disability benefit described in subdivision c of this section.
5 c-4. Notwithstanding the provisions of subdivisions a and c of this
6 section, a New York city uniformed correction/sanitation revised plan
7 member who joined the New York city employees' retirement system before
8 the effective date of this subdivision and is eligible for the acci-
9 dental disability benefit described in subdivision c of this section may
10 at the time of retirement make an election to receive the accidental
11 disability benefit described in subdivision c-2 of this section. Such
12 election shall be duly executed and filed with the administrative head
13 of the New York city employees' retirement system and shall be irrev-
14 ocable. If no such election is made, such member shall receive the acci-
15 dental disability benefit described in subdivision c of this section.
16 c-5. For the purposes of this section, "sixth-year salary" shall have
17 the same meaning as such term is defined in subdivision i of section
18 five hundred six of this article.
19 c-6. For the purposes of subdivisions c-1 and c-2 of this section, the
20 accidental disability benefit shall be calculated using the greater of
21 seventy-five percent of final average salary or seventy-five percent of
22 sixth-year salary if such police/fire member or New York city uniformed
23 correction/sanitation revised plan member is (i) entitled to disability
24 insurance benefits pursuant to section 223 of the federal social securi-
25 ty act, or (ii) is ineligible for such disability insurance benefits on
26 the basis of requirements of section 223(c)(1)(B) of the federal social
27 security act and does not have earnings that demonstrate an ability to
28 engage in substantial gainful activity as set forth in section 223(d)(4)
29 of the federal social security act. In the event that a member no longer
30 meets the requirements of this subdivision, such member's accidental
31 disability benefit shall be calculated using the greater of fifty
32 percent of final average salary or fifty percent of sixth-year salary as
33 set forth in subdivision c-1 or c-2 of this section.
34 § 3. Section 510 of the retirement and social security law is amended
35 by adding a new subdivision i to read as follows:
36 i. Notwithstanding any other provision of this article, the annual
37 escalation provided in this section shall not apply to the ordinary
38 disability benefit provided for in subdivisions e and f of section five
39 hundred six of this article or the accidental disability benefit
40 provided for in subdivisions c-1 and c-2 of section five hundred seven
41 of this article.
42 § 4. Subdivision f of section 511 of the retirement and social securi-
43 ty law, as amended by chapter 18 of the laws of 2012, is amended and a
44 new subdivision g is added to read as follows:
45 f. This section shall not apply to general members in the uniformed
46 correction force of the New York city department of correction or to
47 uniformed personnel in institutions under the jurisdiction of the
48 department of corrections and community supervision and security hospi-
49 tal treatment assistants, as those terms are defined in subdivision i of
50 section eighty-nine of this chapter, provided, however, that the
51 provisions of this section shall apply to a New York city uniformed
52 correction/sanitation revised plan member, except as provided in subdi-
53 vision g of this section.
54 g. This section shall not apply to a police/fire member who receives
55 the ordinary disability benefit provided for in subdivision e of section
56 five hundred six of this article or the accidental disability benefit
S. 5705--B 6
1 provided for in subdivision c-1 of section five hundred seven of this
2 article, or a New York city uniformed correction/sanitation revised plan
3 member who receives the ordinary disability benefit provided for in
4 subdivision f of section five hundred six of this article or the acci-
5 dental disability benefit provided for in subdivision c-2 of section
6 five hundred seven of this article.
7 § 5. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend Retirement and Social Security Law (RSSL) Sections 506, 507, 510
and 511 to change the calculation of Ordinary Disability Retirement
(ODR) benefits and Accidental Disability Retirement (ADR) benefits for:
* Tier III and Revised Tier III members of the New York City Police
Pension Fund (POLICE),
* Tier III and Revised Tier III members of the New York Fire Depart-
ment Pension Fund (FIRE),
* Tier VI Sanitation members of the New York City Employees' Retire-
ment System (NYCERS), and
* Tier VI Corrections members of NYCERS
Note: For purposes of this Fiscal Note, these members are collectively
referred to as the "Uniformed Covered Groups".
For purposes of this Fiscal Note, all POLICE and FIRE members subject
to Article 14 of the RSSL will be referred to as "Tier III POLICE
Members" and "Tier III FIRE Members." Of those Tier III POLICE (FIRE)
Members who have a date of membership prior to April 1, 2012, they will
be referred to as "Original Tier III POLICE (FIRE) Members." Of those
Tier III POLICE (FIRE) Members who have a date of membership on or after
April 1, 2012, they will be referred to as "Revised Tier III POLICE
(FIRE) Members."
The Effective Date of the proposed legislation would be the date of
enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current ODR benefits for the
Uniformed Covered Groups are equal to the greater of:
* 33 1/3% of Final Average Salary (FAS), or
* 2.0% of FAS multiplied by years of credited service (not in excess
of 22 years),
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
Note: Final Average Salary is a Three-Year average (FAS3) for Original
Tier III POLICE and FIRE members and a Five-Year average (FAS5) for all
other Uniformed Covered Group members.
It is the understanding of the Office of the Actuary that POLICE, FIRE
and Sanitation Members are not covered by Workers' Compensation.
Under the proposed legislation, if enacted, the ODR benefit for the
Uniformed Covered Groups would be equal to the greater of:
* 33 1/3% of the greater of FAS or Sixth-year Salary, or
* 2.0 of the greater of FAS or Sixth-year Salary multiplied by years
of credited service not in excess of 22 years, and
* Reduced by 100% of Workers' Compensation benefits (if any).
Sixth-year Salary is defined as the sum of (1) the standard rate that
would be payable to a disabled Uniformed Covered Group member upon six
years of employment, excluding any longevity adjustments and (2) the
average overtime compensation paid to the disabled member. If the disa-
bled member has less than six years of service, the average overtime
compensation would be calculated by adding (1) the overtime compensation
S. 5705--B 7
earned by the member in the years prior to the year of disability, (2)
the annualized overtime compensation earned by the member in the year of
disability and (3) the annualized rate of overtime compensation earned
by the member in the year of disability projected for years (up to six)
following the year of disability, so that there are six years in total,
and then dividing that amount by six.
In addition, the proposed legislation would not apply the Escalation
available under RSSL Section 510 to ODR benefits for Uniformed Covered
Group members. However, such ODR benefits would still be eligible for
Cost-of-Living Adjustments (COLA) under Chapter 125 of the Laws of 2000.
Finally, the proposed legislation would provide that in no event would
the benefit payable in any year in the future to a member retired under
ODR be less than the benefit the member would be entitled to in that
year, under the provisions in effect prior to the enactment of this
proposed legislation.
If enacted, a Uniformed Covered Group member who joined his/her
respective retirement system before the Effective Date of the proposed
legislation would have the option, at the time of disability retirement,
to elect to receive the ODR benefits in effect prior to this proposed
legislation.
IMPACT ON ADR BENEFITS PAYABLE: The current ADR benefits for the
Uniformed Covered Groups are equal to:
* 50% of FAS
* Reduced by 50% of the Primary Social Security Disability benefits or
Primary Social Security benefits, whichever begins first, (determined
under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
Note: Final Average Salary is a Three-Year average (FAS3) for Original
Tier III POLICE and FIRE members and a Five-Year average (FAS5) for all
other Uniformed Covered Group members.
Under the proposed legislation, if enacted, the ADR benefit for the
Uniformed Covered Groups would depend on whether the member is entitled
to Social Security Disability benefits (or would be entitled had the
member met the quarters of coverage requirement).
If the member is not entitled to Social Security Disability benefits,
the ADR benefit would be equal to:
* 50% of the greater of FAS or Sixth-year Salary
* Reduced by 100% of Workers' Compensation benefits (if any).
If the member is entitled to Social Security benefits (or would be
entitled had the member met the quarters of coverage requirement), the
ADR benefit would be equal to:
* 75% of the greater of FAS or Sixth-Year Salary
* Reduced by 100% of Workers' Compensation benefits (if any).
In addition, the proposed legislation would not apply the Escalation
available under RSSL Section 510 to ADR benefits for Uniformed Covered
Group members. However, such ADR benefits would still be eligible for
Cost-of-Living Adjustments (COLA) under Chapter 125 of the Laws of 2000.
Finally, the proposed legislation would provide that in no event would
the benefit payable in any year in the future to a member retired under
ADR be less than the benefit the member would have been entitled to in
that year, under the provisions in effect prior to the enactment of this
proposed legislation.
If enacted, a Uniformed Covered Group member who joined his/her
respective retirement system before the Effective Date of the proposed
legislation would have the option, at the time of disability retirement,
S. 5705--B 8
to elect to receive the ADR benefits in effect prior to this proposed
legislation.
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES:
Based on the census data and the actuarial assumptions and methods noted
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value (APV) of benefits (APVB), APV
of member contributions, the Unfunded Actuarial Accrued Liability (UAAL)
and APV of future employer contributions as of June 30, 2013 for the
Uniformed Covered Groups.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
Fiscal Note, it is assumed that the changes in APVB, APV of member
contributions, UAAL and APV of future employer contributions would be
reflected for the first time in the June 30, 2013 actuarial valuations
of POLICE, FIRE and NYCERS.
Under the One-Year Lag Methodology (OYLM), the first year that changes
in benefits for the Uniformed Covered Groups could impact employer
contributions to POLICE, FIRE and NYCERS would be Fiscal Year 2015.
In accordance with ACNY Section 13.638.2(k-2), new UAAL attributable
to benefit changes are to be amortized as determined by the Actuary but
generally over the remaining working lifetime of those impacted by the
benefit changes.
As of June 30, 2013, the remaining working lifetime is approximately
18 years for the Tier III POLICE Members, 24 years for the Tier III FIRE
members, 21 years for Tier VI Sanitation members and 20 years for Tier
VI Corrections members. Recognizing that this period will decrease over
time as these groups of members matures and that virtually all of the
FIRE, Sanitation and Corrections members that would be impacted by the
benefit changes are new entrants, the Actuary would likely choose to
amortize the new UAAL attributable to this proposed legislation over a
15-year period (14 payments under the OYLM Methodology).
The following Table 1 presents an estimate of the increases due to the
changes in ODR and ADR provisions for the Uniformed Covered Groups in
the APV of future employer contributions and in employer contributions
to POLICE, FIRE and NYCERS for Fiscal Years 2015 through 2019 that would
occur based on the applicable actuarial assumptions and methods noted
herein:
Table 1
Estimated Financial Impact If Certain Revisions are Made to
Provisions for ODR and ADR Benefits for the Uniform Covered Groups*
(Assumes 25% of ADR Retirees Qualify for Social Security Disability
Benefits)
($ Millions)
Fiscal Increase in APV of Increase in Employer
Year Future Employer Contributions
Contributions
2015
*POLICE $59.6 $7.2
*FIRE 1.9 0.2
*Sanitation 2.0 0.3
*Corrections 4.50.6
*Total $68.0 $8.3
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2016
*POLICE $86.2 $10.0
*FIRE 8.2 0.9
*Sanitation 3.9 0.5
*Corrections 7.30.8
*Total $105.6 $12.2
2017
*POLICE $111.4 $12.5
*FIRE 14.3 1.5
*Sanitation 5.5 0.5
*Corrections 9.81.0
*Total $141.0 $15.5
2018
*POLICE $134.3 $14.6
*FIRE 20.1 2.1
*Sanitation 7.3 0.7
*Corrections 12.71.3
*Total $174.4 $18.7
2019
*POLICE $153.6 $16.3
*FIRE 25.6 2.6
*Sanitation 8.7 0.8
*Corrections 15.81.6
*Total $203.7 $21.3
*Note that the current assumption used in the actuarial valuations is
that no ADR retirees qualify for Social Security Disability Benefits.
The following Table 2 presents an estimate of the increases due to the
changes in ODR and ADR provisions for the Uniformed Covered Groups in
the APV of future employer costs and in employer costs to POLICE, FIRE
and NYCERS for Fiscal Years 2015 through 2019 assuming that 25% of ADR
retirees will qualify for Social Security Disability benefits. The actu-
al cost will depend on the number of members who retire under ADR that
qualify for Social Security Disability benefits at the time of disabili-
ty retirement. The actual costs will be greater/less to the extent that
the percentage is greater/less than 25%.
Table 2
Estimated Financial Impact If Certain Revisions are Made to
Provisions for ODR and ADR Benefits for the Uniform Covered Groups*
(Assumes 25% of ADR Retirees Qualify for Social Security Disability
Benefits)
($ Millions)
Fiscal Increase in APV of Increase in Employer
Year Future Employer Costs
Costs
2015
*POLICE $85.3 $10.3
*FIRE 2.6 0.3
*Sanitation 2.3 0.3
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*Corrections 5.10.6
*Total $95.3 $11.5
2016
*POLICE $122.4 $14.2
*FIRE 11.5 1.2
*Sanitation 4.4 0.5
*Corrections 8.30.9
*Total $146.6 $16.8
2017
*POLICE $157.1 $17.6
*FIRE 20.0 2.1
*Sanitation 6.2 0.6
*Corrections 11.21.1
*Total $194.5 $21.4
2018
*POLICE $188.7 $20.5
*FIRE 28.0 2.9
*Sanitation 8.2 0.8
*Corrections 14.41.4
*Total $239.3 $25.6
2019
*POLICE $215.3 $22.9
*FIRE 35.7 3.6
*Sanitation 9.7 1.0
*Corrections 17.91.8
*Total $278.6 $29.3
* Note that the assumption used is 25% of ADR retirees qualify for
Social Security Disability Benefits.
The estimated increases in employer contributions and employer costs
shown in Table 1 and Table 2 are based upon the following projection
assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget (NYCOMB)
for use in the January 2015 Financial Plan (Updated Preliminary Projec-
tions).
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of POLICE, FIRE, NYCERS
and other New York City agencies 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 are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of POLICE, FIRE and NYCERS used
under the OYLM to determine the Updated Preliminary Fiscal Year 2015
employer contributions.
S. 5705--B 11
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of POLICE, FIRE and NYCERS.
The 3,601 Original Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 28, average service of approximately 2.2
years and an average salary of approximately $63,000.
The 1,916 Revised Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 27, average service of approximately 0.6
years and an average salary of approximately $55,000.
Overall, the 5,517 Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 28, average service of approximately 1.7
years, and an average salary of approximately $60,000.
The 169 Tier III FIRE Members as of June 30, 2013 (including the one
Tier III member who has a date of membership prior to April 1, 2012) had
an average age of approximately 27, average service of approximately 0.5
years and an average salary of approximately $48,200.
The 382 Tier VI Sanitation Members as of June 30, 2013 had an average
age of approximately 35, average service of approximately 1.0 years and
an average salary of approximately $47,500.
The 877 Tier VI Corrections Members as of June 30, 2013 had an average
age of approximately 32, average service of approximately 0.5 years and
an average salary of approximately $46,000.
ACTUARIAL ASSUMPTIONS AND METHODS: The additional employer contrib-
utions presented herein have been calculated based on the actuarial
assumptions and methods in effect for the June 30, 2013 (Lag) actuarial
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of POLICE, FIRE and NYCERS including the General
Wage Increase assumption of 3.0% per year which was used to project the
Sixth-year Salary for future years.
It was further assumed that all individuals who become members of
his/her respective retirement system before the Effective Date of the
proposed legislation would elect to be covered by the new ADR and ODR
benefit provisions provided for in this proposed legislation.
Neither this Fiscal Note nor the actuarial valuation methodology used
to determine employer contributions to POLICE, FIRE and NYCERS reflect a
calculation of the value of an offset for Workers' Compensation bene-
fits. For POLICE, FIRE and Sanitation this is because it is the under-
standing of the Office of the Actuary that POLICE, FIRE and Sanitation
members are not covered by such benefits.
It is the understanding of the Office of the Actuary that Corrections
members are covered by Workers' Compensation benefits. However, since
both ADR and ODR benefits under both the current provisions and proposed
legislation are offset by Workers' Compensation benefits, any Workers'
Compensation benefits paid would not impact the costs shown.
Employer contributions under current methodology have been estimated
assuming the additional APVB would be financed through future normal
contributions including an amortization of the new UAAL attributable to
this proposed legislation over a 15-year period (14 payments under the
OYLM Methologody).
New entrants were projected to replace the members expected to leave
the active population to maintain a steady-state population.
The following Table 3a presents the total number of active employees
of POLICE used in the projections, assuming a level work force, and the
S. 5705--B 12
cumulative number (i.e., net of withdrawals) of Revised Tier III Members
as of each June 30 from 2013 through 2017.
Table 3a
Surviving Actives from Census on June 30, 2013
and
Cumulative New Revised Tier III POLICE Members from 2013
Used in the Projections*
Original Revised
June 30 Tier I & II Tier III Tier III Total
2013 29,258 3,601 1,916 34,775
2014 26,784 3,500 4,491 34,775
2015 24,565 3,406 6,804 34,775
2016 22,571 3,315 8,889 34,775
2017 20,937 3,225 10,613 34,775
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
The following Table 3b 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 Tier III Members as of
each June 30 from 2013 through 2017.
Table 3b
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier III FIRE Members from 2013
Used in the Projections*
June 30 Tier I & II Tier III Total
2013 10,013 169 10,182
2014 9,486 696 10,182
2015 8,988 1,194 10,182
2016 8,509 1,673 10,182
2017 8,055 2,127 10,182
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
The following Table 3c presents the total number of active employees
of Sanitation used in the projections, assuming a level work force, and
the cumulative number (i.e., net of withdrawals) of Tier VI Members as
of each June 30 from 2013 through 2017.
Table 3c
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier VI Sanitation Members from 2013
Used in the Projections*
June 30 Tier I, II & IV Tier VI Total
2013 6,579 382 6,961
2014 6,150 811 6,961
S. 5705--B 13
2015 5,858 1,103 6,961
2016 5,495 1,466 6,961
2017 5,239 1,722 6,961
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
The following Table 3d presents the total number of active employees
of Corrections used in the projections, assuming a level work force, and
the cumulative number (i.e., net of withdrawals) of Tier VI Members as
of each June 30 from 2013 through 2017.
Table 3d
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier VI Corrections Members from 2013
Used in the Projections*
June 30 Tier I, II & III Tier VI Total
2013 7,798 877 8,675
2014 7,278 1,397 8,675
2015 6,865 1,810 8,675
2016 6,414 2,261 8,675
2017 5,919 2,756 8,675
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
For purposes of estimating the impact of the Tier III Escalation for
retired Members, consistent with an underlying Consumer Price Inflation
(CPI) assumption of 2.5% per year, Tier III Escalation of 2.5% per year
has been assumed.
This compares with the current Chapter 125 of the Laws of 2000 auto
COLA assumption of 1.5% per year (i.e., 50% of CPI adjusted to recognize
1.0% minimum and 3.0% maximum) on the first $18,000 of benefit.
ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impacts of the proposed legislation discussed in this
Fiscal Note are those appropriate for budgetary models and determining
annual employer contributions to POLICE, FIRE and NYCERS.
However, the economic assumptions (current and proposed) that are used
for determining employer contributions do not develop risk-adjusted,
economic values of benefits. Such risk-adjusted, economic values of
benefits would likely differ significantly from those developed by the
budgetary models.
STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
ary for the New York City Retirement Systems. I am an Associate 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.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-30, dated
June 8, 2015.
