Removes post-retirement earnings restrictions for New York city department of correction uniformed personnel with respect to a retiree subsequent to his or her earliest eligibility date for service retirement.
STATE OF NEW YORK
________________________________________________________________________
5850--C
2019-2020 Regular Sessions
IN SENATE
May 15, 2019
___________
Introduced by Sen. GOUNARDES -- 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 -- recommitted to the Committee on Civil Service and Pensions in
accordance with Senate Rule 6, sec. 8 -- 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
eligibility of uniformed personnel of the New York city department of
correction for ordinary disability benefits
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 507-a of the retirement and social security law is
2 amended by adding a new subdivision f to read as follows:
3 f. Notwithstanding any other provision of law, there shall be no
4 restrictions on the earnings from employment not in public service
5 permitted to a member of the uniformed personnel of the New York city
6 department of correction who:
7 1. has retired pursuant to the provisions of this section; and
8 2. was subject to the provisions of (i) subdivision d of section five
9 hundred four of this article, (ii) subdivision c of section five hundred
10 four-a of this article, or (iii) subdivision c of section five hundred
11 four-b of this article prior to his or her retirement, subsequent to the
12 date as of which he or she would have been eligible for service retire-
13 ment.
14 § 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend Section 507-a
of the Retirement and Social Security Law (RSSL) by adding a new subdi-
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD04265-08-0
S. 5850--C 2
vision f to remove post-retirement earnings restrictions from private
sector employment for periods after the applicable service retirement
eligibility date for certain retired uniformed personnel of the New York
City Department of Correction who are receiving certain disability bene-
fits from the New York City Employees' Retirement System (NYCERS).
Effective Date: Upon enactment.
BACKGROUND: Currently, NYCERS restricts the total calendar year
Personal Service Income (PSI) resulting from all public and private
employment for certain retirees, including certain Tier 3 correction
officers who receive disability retirement benefits under RSSL Section
507-a (Correction Disability Retiree).
If a Correction Disability Retiree's PSI from all public and private
employment exceeds the NYCERS PSI limitation for the calendar year, then
such retiree's disability pension is suspended for 12 months. The NYCERS
PSI limitation for 2018 was $31,100 and increases each year with the
Consumer Price Index. As of the date this Fiscal Note was released, the
2019 limit had not been published.
IMPACT ON BENEFITS: Under the proposed legislation, if enacted,
Correction Disability Retirees, who were Tier 3 correction members in
the Early Service Retirement Benefit Plan for General Members, the
Correction Officer 20-Year Plan, or the Correction Captain 20-Year Plan,
would no longer be subject to the PSI limitation for private employment
earnings after the date they would have been eligible to receive a
service retirement in their respective plan.
For the purposes of this Fiscal Note, it was assumed that Correction
Disability Retirees would continue to be limited by other post-retire-
ment earnings restrictions such as New York City Charter (NYCC) Section
1117 and RSSL Section 212.
NYCC Section 1117 limits the PSI for any NYCERS retiree to $1,800 per
year from most public employment within New York State (including New
York City). PSI from those sources that exceeds $1,800 per year will
result in a suspension of the retiree's pension. However, NYCC Section
1117 places no limits on the amounts of PSI that may be earned from
private employment. RSSL Section 212 permits a retiree to earn up to
$35,000 per year from post-retirement public employment, notwithstanding
NYCC Section 1117, if certain conditions are met.
FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: The change in
employer costs would depend upon the amount and timing of pension
payments that would no longer be suspended due to this legislation.
To the extent the NYCERS earnings limitation would have applied in
Calendar Years 2020 and later, Correction Disability Retirees whose
post-retirement earnings exceeded the PSI limitation would have had
their pension suspended for 12 months in years after the date on which
they would have become eligible for service retirement.
Enactment of the legislation would eliminate the suspension of bene-
fits for those Correction Disability Retirees whose PSI exceeds the
NYCERS earnings limitation after the date on which they would have
become eligible for service retirement.
Suspended pensions due to earnings that exceed the NYCERS PSI limita-
tion, are currently treated as an actuarial gain, and the financial
impact is recognized at the time of the event. Consequently, changes in
employer contributions have been estimated assuming that the increase in
the pension payment of approximately $135,700 will be financed over a
time period used under the current amortization period for actuarial
gains and losses under the Entry Age Normal cost method. Using this
approach, the additional PVFB would be amortized over a closed 15-year
S. 5850--C 3
period (14 payments under the One-Year Lag Methodology (OYLM)) using
level dollar payments.
Based on the Actuary's actuarial assumptions and methods in effect as
of June 30, 2019, the enactment of this proposed legislation is esti-
mated to increase annual employer contributions by approximately
$16,000.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2019 (Lag) actuarial valuation of
NYCERS to determine the Preliminary Fiscal Year 2021 employer contrib-
utions.
Additional data for the seven Correction Disability Retirees whose
post-retirement earnings exceeded the PSI limitation for calendar year
2018 was provided by NYCERS. These members had an average pension of
approximately $19,400 per year.
ACTUARIAL ASSUMPTIONS AND METHODS: The additional employer costs
presented herein have been calculated based on the same actuarial
assumptions and methods in effect for the June 30, 2019 (Lag) actuarial
valuations used to determine the Preliminary Fiscal Year 2021 employer
contributions of NYCERS.
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 NYCERS 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 possible increased administrative costs attributable to enact-
ment of the proposed legislation.
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
ary for, and independent of, the New York City Retirement Systems and
Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled
Actuary under the Employee Retirement Income and Security Act of 1974, a
Member of the American Academy of Actuaries, and a Fellow of the Confer-
ence of Consulting Actuaries. I meet the Qualification Standards of the
American Academy of Actuaries to render the actuarial opinion contained
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 2020-31 dated April 23,
2020 was prepared by the Chief Actuary for the New York City Employees'
Retirement System. This estimate is intended for use only during the
2020 Legislative Session.