STATE OF NEW YORK
________________________________________________________________________
5901--E
2019-2020 Regular Sessions
IN SENATE
May 16, 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 -- committee discharged, bill amended, ordered reprinted as
amended and recommitted to said committee -- 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 committee -- committee discharged,
bill amended, ordered reprinted as amended and recommitted to said
committee
AN ACT to amend the retirement and social security law, the education
law and the administrative code of the city of New York, in relation
to providing cost-of-living adjustments
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subdivision g of section 78-a of the retirement and social
2 security law, as added by chapter 125 of the laws of 2000, is amended to
3 read as follows:
4 g. Notwithstanding any other provision of law, effective the first day
5 of September, two thousand twenty-one, the surviving spouse of a
6 deceased retired member who retired under an option which provides that
7 benefits are to be continued for life to the surviving spouse after the
8 death of the retired member, shall be entitled to receive benefits
9 pursuant to this section. Said benefits shall be [fifty] one hundred
10 percent of the monthly benefits which the pensioner would be receiving
11 pursuant to this section if living, and shall commence (i) with a
12 payment for the month of September, two thousand twenty-one, or (ii) the
13 month following the death of the deceased retired member, whichever is
14 later.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD08641-08-0
S. 5901--E 2
1 § 2. Subdivision g of section 378-a of the retirement and social secu-
2 rity law, as added by chapter 125 of the laws of 2000, is amended to
3 read as follows:
4 g. Notwithstanding any other provision of law, effective the first day
5 of September, two thousand twenty-one, the surviving spouse of a
6 deceased retired member who retired under an option which provides that
7 benefits are to be continued for life to the surviving spouse after the
8 death of the retired member, shall be entitled to receive benefits
9 pursuant to this section. Said benefits shall be [fifty] one hundred
10 percent of the monthly benefits which the pensioner would be receiving
11 pursuant to this section if living, and shall commence (i) with a
12 payment for the month of September, two thousand twenty-one, or (ii) the
13 month following the death of the deceased retired member, whichever is
14 later.
15 § 3. Subdivision g of section 532-a of the education law, as added by
16 chapter 125 of the laws of 2000, is amended to read as follows:
17 g. Notwithstanding any other provision of law, effective the first day
18 of September, two thousand twenty-one, the surviving spouse of a
19 deceased retired member who retired under an option which provides that
20 benefits are to be continued for life to the surviving spouse after the
21 death of the retired member, shall be entitled to receive benefits
22 pursuant to this section. Said benefits shall be [fifty] one hundred
23 percent of the monthly benefits which the pensioner would be receiving
24 pursuant to this section if living, and shall commence (i) with a
25 payment for the month of September, two thousand twenty-one, or (ii) the
26 month following the death of the deceased retired member, whichever is
27 later.
28 § 4. Subdivision g of section 13-696 of the administrative code of the
29 city of New York, as added by chapter 125 of the laws of 2000, is
30 amended to read as follows:
31 g. Notwithstanding any other provision of law, effective the first day
32 of September, two thousand twenty-one, the surviving spouse of a
33 deceased retired member of the New York city employees' retirement
34 system, the New York city teachers' retirement system, the New York city
35 police pension fund, the New York city fire department pension fund or
36 the New York city board of education retirement system who retired under
37 an option which provides that benefits are to be continued for life to
38 the surviving spouse after the death of the member, shall be entitled to
39 receive a benefit pursuant to this section. Said benefit shall be
40 [fifty] one hundred percent of the monthly benefit which the pensioner
41 would be receiving if living, and shall commence (i) with a payment for
42 the month of September, two thousand twenty-one, or (ii) the month
43 following the death of the deceased retired member, whichever is later.
44 § 5. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would provide an increase in the defined benefit cost-of-
living adjustment (COLA) for New York public retirement systems. Start-
ing with a payment in September 2021, the cost-of-living benefit payable
to a surviving spouse who is eligible for COLA will be increased from
fifty percent to one hundred percent of the benefit that the pensioner
would have received.
Insofar as this bill affects the New York State and Local Employees'
Retirement System, pursuant to Section 25 of the Retirement and Social
Security Law, the increased costs would be borne entirely by the State
of New York and would require an itemized appropriation sufficient to
S. 5901--E 3
pay the cost of the provision. If this bill were enacted, the increase
in the present value of benefits would be approximately $1.1 billion.
Insofar as this bill affects the New York State and Local Police and
Fire Retirement System (PFRS), the increased costs would be shared by
the State of New York and the participating employers in the PFRS. If
this bill were enacted, the increase in the present value of benefits
would be approximately $115 million. The estimated first year cost would
be approximately $2.5 million to the State of New York and approximately
$10 million to the participating employers in the PFRS.
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, 2019 actuarial valu-
ation. Distributions and other statistics can be found in the 2019
Report of the Actuary and the 2019 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2015,
2016, 2017, 2018 and 2019 Annual Report to the Comptroller on Actuarial
Assumptions, and the Codes, Rules and Regulations of the State of New
York: Audit and Control.
The Market Assets and GASB Disclosures are found in the March 31, 2019
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 fiscal note does not constitute a legal opinion on the viability
of the proposed change nor is it intended to serve as a substitute for
the professional judgment of an attorney.
This estimate, dated February 11, 2020, and intended for use only
during the 2020 Legislative Session, is Fiscal Note No. 2020-49,
prepared by the Actuary for the New York State and Local Retirement
System.
FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation, as it relates to the City
of New York, would amend Section 13-696 of the Administrative Code of
the City of New York (ACCNY) to increase the Cost-of-Living Adjustment
(COLA), effective September 1, 2021, to an eligible surviving spouse
from 50% to 100% of the COLA the pensioner would be receiving if still
alive for the New York City Employees' Retirement System (NYCERS), the
New York City Teachers' Retirement System (NYCTRS), the New York City
Board of Education Retirement System (BERS), the New York City Police
Pension Fund (POLICE), and the New York City Fire Pension Fund (FIRE),
collectively known as the New York City Retirement Systems and Pension
Funds (NYCRS).
Effective Date: Upon enactment.
BACKGROUND: The COLA currently provides for an annual increase equal
to a percentage of the annual retirement allowance otherwise payable,
computed without optional modification on the first $18,000 of retire-
ment allowance. That percentage is equal to 50% of the increase in the
consumer price index (CPI) in the one-year period ending on the March 31
prior to the COLA effective on the ensuing September 1. The percentage
is rounded to the next higher one-tenth of one percent and shall not be
less than 1% nor more than 3%.
The surviving spouse of a deceased retired member who retired under an
option which provides that benefits are to be continued for life to the
surviving spouse after the death of the retired member is currently
entitled to receive a COLA equal to 50% of the COLA the pensioner would
S. 5901--E 4
be receiving if living. This proposed legislation would change from 50%
to 100% the percentage of COLA a surviving spouse receives after the
death of the retired member.
FINANCIAL IMPACT - SUMMARY: The estimated financial impact to NYCRS
for increasing the surviving spouse COLA from 50% to 100% of the retired
member's COLA as described above is an increase in Present Value of
Future Benefits (PVFB) of $574.1 million and an increase in the first
year annual employer contributions of $541.0 million. A breakdown of the
financial impact by NYCRS is shown in the table below.
NYCRS Additional Estimated First Year
Present Value of Future Annual Employer
Benefits Contributions*
($ Millions) ($ Millions)
NYCERS $337.4 $316.2
NYCTRS 177.9 169.8
BERS 19.9 18.7
POLICE 26.7 24.9
FIRE 12.2 11.4
Total $574.1 $541.0
* Employer contributions after the first year are estimated to be $4 -
$5 million per year.
In accordance with ACCNY Section 13-638.2(k-2), new Unfunded Accrued
Liability (UAL) attributable to benefit changes are to be amortized as
determined by the Actuary, but are generally amortized over the remain-
ing working lifetime of those impacted by the benefit changes.
For the purposes of this Fiscal Note it has been assumed that
increases in UAL attributable to current retirees would be recognized
immediately and that increases in UAL attributable to active members
would be amortized over periods ranging from 12 to 15 years depending on
the NYCRS (11 to 14 payments, respectively, under One-Year Lag Methodol-
ogy (OYLM)).
CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is
assumed that the changes in the PVFB and annual employer contributions
would be reflected for the first time in the June 30, 2019 actuarial
valuations of the NYCRS. In accordance with the OYLM used to determine
employer contributions, the increase in employer contributions would
first be reflected in Fiscal Year 2021.
CENSUS DATA: The estimates presented herein are based on the census
data used in the Preliminary June 30, 2019 (Lag) actuarial valuations of
NYCRS to determine the Preliminary Fiscal Year 2021 employer contrib-
utions.
ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and annual
employer contributions 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 NYCRS. Also, assumptions for active
members electing a form of pension at retirement that would continue a
payment to a surviving spouse (ranging from 20% to 35%) were made based
on the distribution of current elections and the Actuary's estimate of
future elections.
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 NYCRS and other exogenous factors
such as investment, contribution, and other risks. If actual experience
deviates from actuarial assumptions, the actual costs could differ from
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those presented herein. Costs are also dependent on the actuarial meth-
ods 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 initial, additional administrative costs to implement the
proposed legislation.
* The impact of this proposed legislation on Other Postemployment
Benefit 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 2020-55 dated June 25,
2020 was prepared by the Chief Actuary for the New York City Employees'
Retirement System, the New York City Teachers' Retirement System, the
New York City Board of Education Retirement System, the New York City
Police Pension Fund, and the New York City Fire Pension Fund. This esti-
mate is intended for use only during the 2020 Legislative Session.
