STATE OF NEW YORK
________________________________________________________________________
6135--B
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 -- 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
AN ACT to amend the administrative code of the city of New York, in
relation to increasing benefits payable by the correction officers'
variable supplements fund to beneficiaries
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 13-194 of the administrative code of the city of
2 New York is amended by adding a new subdivision 12 to read as follows:
3 12. In addition to the payments set forth in paragraphs (c) and (d) of
4 subdivision four of this section, there shall be paid to each benefici-
5 ary on or about the December fifteenth next succeeding his or her date
6 of retirement, an amount equal to the variable supplements payments,
7 subject to the provisions of items (i) and (ii) of subparagraph one of
8 paragraph (e) of subdivision four of this section, that he or she would
9 have received, had he or she retired on the date of his or her earliest
10 eligibility for service retirement, in the period measured from (1) the
11 later of (i) such earliest eligibility date and (ii) January first, two
12 thousand eighteen and (2) his or her date of retirement.
13 § 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This bill provides certain New York City Employees'
Retirement System (NYCERS) Correction officers a lump sum benefit upon
retirement, commonly referred to as a Deferred Retirement Option Plan
(DROP), equal to the amount of Correction Officer Variable Supplements
Fund (COVSF) payments such officer would have received if he or she had
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD04286-06-0
S. 6135--B 2
retired at the later of their respective earliest service retirement
eligibility date or January 1, 2019.
Effective Date: Upon enactment.
BACKGROUND: Correction officers who participate in NYCERS and who
retire with immediate payability of a service retirement at their earli-
est service retirement eligibility date (e.g. after 20 or 25 years of
credited service) are entitled to receive supplemental non-pension COVSF
benefits in the amount of $12,000 per calendar year. Correction officers
who continue to work beyond their earliest service retirement eligibil-
ity date are ineligible to receive COVSF payments until retirement, even
though they would be eligible to retire from service and receive COVSF
benefits.
IMPACT ON BENEFITS: This bill would provide to NYCERS correction offi-
cers who continue to work beyond their earliest service retirement
eligibility date a lump sum DROP payment consisting of the annual COVSF
payment each year beyond the later of their earliest service retirement
date or January 1, 2019 (i.e. the COVSF payments the retiree would have
received if he or she had retired at his or her earliest service retire-
ment eligibility date or January 1, 2019, whichever is later) without
any adjustment for interest.
The DROP does not apply to deaths or to disability retirement, even if
those events occur after the earliest service retirement eligibility
date.
FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial assumptions
and methods described herein, the enactment of this proposed legislation
would increase the Present Value of Future Benefits (PVFB) by approxi-
mately $102.8 million.
Under the Entry Age Normal cost method used to determine the employer
contributions to NYCERS, there would be an increase in the Unfunded
Accrued Liability (UAL) of approximately $56.1 million and an increase
in the Present Value of future employer Normal Cost of $46.7 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 NYCERS correction officers
is approximately 12 years.
For the purposes of this Fiscal Note, the increase in UAL was amor-
tized over a 12-year period (11 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 $11.7 million each year.
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, 2019 actuarial valuation of NYCERS. 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, 2018 (Lag) actuarial valuation of
NYCERS to determine the Preliminary Fiscal Year 2020 employer contrib-
utions updated to reflect the change in demographics as of June 30,
2019.
S. 6135--B 3
The 10,054 NYCERS Correction officers as of June 30, 2019 had an aver-
age age of approximately 39.2 years, and average service of approximate-
ly 8.9 years.
As of June 30, 2018, there were 10,330 NYCERS Correction officers with
an average age of approximately 39.0 years, and average service of
approximately 8.8 years.
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 realization of the actuarial assumptions used, as well as
certain demographic characteristics of the Plan 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 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.
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 2020-02 dated February 6,
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.
