STATE OF NEW YORK
________________________________________________________________________
6135--A
2017-2018 Regular Sessions
IN SENATE
May 11, 2017
___________
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
-- 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
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 purposes of this Fiscal Note, Covered Participants refers to
NYCERS Correction members, with the exception of Correction Revised Plan
Members who are ineligible for Section 507-a disability benefits pursu-
ant to section 507-a(e), who joined NYCERS from July 27, 1976 through
March 31, 2012 and are subject to RSSL Article 14.
Under the proposed legislation, Covered Participant with less than 10
years of credited service would be entitled to 507-a disability benefits
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11667-03-8
S. 6135--A 2
without having the burden to show that a disability resulted from a
work-related accident.
Effective Date: Upon enactment.
IMPACT ON COVERAGE: If enacted, the proposed legislation would elimi-
nate the minimum service eligibility requirements for Covered Partic-
ipants to qualify for benefits available under RSSL Section 507-a.
IMPACT ON BENEFITS: Currently, Covered Participants who are determined
to be disabled by the NYCERS' Medical Board, and have accumulated at
least 10 years of service credit, are eligible for an immediate ordinary
disability retirement (ODR) allowance 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 in effect become available to disabled Covered
Participants, subject to approval under the applicable statutes and
procedures established by NYCERS, irrespective of service credit accumu-
lation.
For 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 - OVERVIEW: The ultimate cost of this proposed legis-
lation would be any additional benefits paid to NYCERS participants
compared with current law.
The amount and timing of the financial impact of the proposed legis-
lation 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 Actuary for
such purposes.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: Based on the anticipated
group of Covered Participants and based on the actuarial assumptions and
methods herein, the enactment of this proposed legislation would
increase the Actuarial Present Value (APV) of Benefits (APVB) for NYCERS
by approximately $3.9 million as of June 30, 2017.
Under the Entry Age Normal cost method used to determine employer
contribution to NYCERS, there would be an increase in the APV of future
employer normal cost of $13.9 million offset by a decrease in the
Unfunded Accrued Liability (UAL) of approximately $10.0 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, 2017, 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) using level dollar payments. The payment plus the increase in the
Normal Cost results in an increase in annual employer contributions of
approximately $335,000 per year.
OTHER COSTS: Not measures in this Fiscal Note are the following:
* The possible, additional administrative costs of NYCERS to implement
the proposed legislation.
* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
S. 6135--A 3
CONTRIBUTION TIMING: For purposes of this Fiscal Note, it is assumed
that the changes in the APV 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 One-Year
Lag Methodology (OYLM) used to determine employer contributions, the
increase in employer contributions would first be reflected in Fiscal
Year 2020.
CENSUS DATA: The estimates presented herein are based on the active
census data used in the Preliminary June 30, 2017 (Lag) actuarial valu-
ation of NYCERS to determine the Preliminary Fiscal Year 2019 employer
contributions, including 9,403 Tier 3 and 6 Corrections members with
salaries of approximately $810.8 million.
Only 5,074 Covered Participants with salaries of approximately $341.0
million have less than 10 years of credited service as of June 30, 2017.
Therefore, the effect of the proposed legislation would be limited to a
subset of these 5,074 members who may become disabled before reaching 10
years of credited service.
ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the UAL, APV of
future employer contributions, and annual employer contributions
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
contributions of NYCERS. Please note these assumptions and methods are
subject to change as this valuation is not considered final until the
end of Fiscal Year 2019.
The census data used in the June 30, 2017 (Lag) actuarial valuation of
NYCERS did not contain any Enhanced Plan members, but the election peri-
od was still open as of June 30, 2017. Based on information provided by
NYCERS, all Tier 6 Correction members are assumed to elect to partic-
ipate in the Enhanced Plan for the purpose 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
(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 2018-35 dated June 11,
2018, was prepared by the Chief Actuary for the New York City Employees'
Retirement System. This estimate is intended for use only during the
2018 Legislative Session.