STATE OF NEW YORK
________________________________________________________________________
5852--A
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
AN ACT to amend the retirement and social security law, in relation to
disability retirement of certain New York city correction members
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph 1 of subdivision b of section 507-a of the
2 retirement and social security law, as added by chapter 452 of the laws
3 of 1983, is amended to read as follows:
4 1. Have at least ten years of total service credit, except that a
5 member in the uniformed personnel of the New York city department of
6 correction may file an application without regard to length of service,
7 and
8 § 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would modify the eligibil-
ity requirements of Retirement and Social Security Law (RSSL) Section
507-a for certain New York City Department of Correction (Correction)
members of the New York City Employees' Retirement System (NYCERS).
For the purposes of this Fiscal Note, Covered Participants refers to
NYCERS Correction members who are subject to RSSL Article 14 and are not
Correction Revised Plan Members.
Under the proposed legislation, Covered Participant with less than 10
years of credited service would be entitled to 507-a disability benefits
without having to show the disability resulted from a work-related acci-
dent.
Effective Date: Upon enactment.
IMPACT ON BENEFITS: Currently, Covered Participants who are determined
to be disabled by the NYCERS' Medical Board, and have accumulated at
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD04310-06-9
S. 5852--A 2
least 10 years of service credit, are eligible for an immediate ordinary
disability retirement (ODR) allowance pursuant to RSSL Section 507-a
equal to the greater of:
1) 1/3 of Final Average Salary (FAS), or
2) 1/60 of FAS multiplied by credited service.
If such member is also eligible for Service Retirement, the ODR bene-
fit cannot be less than the retirement allowance for Service Retirement.
Under the proposed legislation, if enacted, the ODR benefit under RSSL
Section 507-a would become available to disabled Covered Participants,
subject to approval under the applicable statutes and procedures estab-
lished by NYCERS, irrespective of service credit accumulation.
The proposed legislation would also eliminate the minimum service
eligibility requirements for Covered Participants to qualify for bene-
fits available under RSSL Section 507-a.
For the purposes of this Fiscal Note, the Actuary has assumed that the
proposed Section 507-a benefit would only be available to eligible
Covered Participants prospectively on and after the Effective Date.
FINANCIAL IMPACT - PRESENT VALUES: The ultimate cost of this proposed
legislation would be any additional benefits paid to NYCERS participants
compared with current law. The timing of the financial impact of the
proposed legislation would depend on the number, salaries, ages, and
lengths of service of Covered Participants who become eligible for 507-a
benefits and the actuarial assumptions and methods employed by the Actu-
ary for such purposes.
Based on the anticipated Covered Participants and the actuarial
assumptions and methods described herein, the enactment of this proposed
legislation would increase the Present Value of Future Benefits (PVFB)
by approximately $6.3 million.
Under the Entry Age Normal cost method used to determine the employer
contributions to NYCERS, there would be a decrease in the Unfunded
Accrued Liability (UAL) of approximately $13.1 million, offset by an
increase in the Present Value of future employer Normal Cost of $19.4
million.
FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
Administrative Code of the City of New York (ACCNY) Section
13-638.2(k-2), new UAL attributable to benefit changes are to be amor-
tized as determined by the Actuary but generally over the remaining
working lifetime of those impacted by the benefit changes. As of June
30, 2018, the remaining working lifetime of the Covered Participants is
approximately 17 years.
For the purposes of this Fiscal Note, the increase in UAL was amor-
tized over a 17-year period (16 payments under the One-Year Lag Method-
ology (OYLM)) using level dollar payments. This payment plus the
increase in the Normal Cost results in an increase in annual employer
contributions of approximately $754,000 per year.
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of NYCERS and other New
York City agencies to implement the proposed legislation.
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is
assumed that the changes in the Present Value of future employer
contributions and annual employer contributions would be reflected for
the first time in the June 30, 2018 actuarial valuation of NYCERS. In
accordance with the OYLM used to determine employer contributions, the
S. 5852--A 3
increase in employer contributions would first be reflected in Fiscal
Year 2020.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2018 (Lag) actuarial valuation of
NYCERS to determine the Preliminary Fiscal Year 2020 employer contrib-
utions.
There were 5,716 Covered Participants with less than 10 years of cred-
ited service as of June 30, 2018 and they had an average age of approxi-
mately 33.5 years, average service of approximately 3.1 years, and an
average salary of approximately $68,039.
ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
future employer contributions and annual employer contributions
presented herein have been calculated based on the actuarial assumptions
and methods in effect for the June 30, 2018 (Lag) actuarial valuations
used to determine the Preliminary Fiscal Year 2020 employer contrib-
utions of NYCERS.
RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend
highly on the actuarial assumptions and methods used and are subject to
change based on the realization of potential investment, demographic,
contribution, and other risks. If actual experience deviates from actu-
arial 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.
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 2019-38 dated June 17,
2019 was prepared by the Chief Actuary for the New York City Employees'
Retirement System. This estimate is intended for use only during the
2019 Legislative Session.
