Relates to increasing lump sum payments; inceases lump sum payments for eligible members of the New York state and local police and fire retirement system, and sheriffs, undersheriffs, deputy sheriffs and correction officers, who are employed in certain counties from twenty-five to thirty-five percent of the actuarial equivalent of his or her retirement allowance at the time of retirement if he or she retires five years after being eligible to retire.
STATE OF NEW YORK
________________________________________________________________________
6571--B
2017-2018 Regular Sessions
IN SENATE
June 5, 2017
___________
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when
printed to be committed to the Committee on Rules -- 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, in relation to
increasing lump sum payments
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Paragraph e of subdivision 2 of section 1100 of the retire-
2 ment and social security law, as added by chapter 523 of the laws of
3 2013, is amended to read as follows:
4 e. Any member who files for retirement after being eligible to retire
5 for five years may elect to receive a [twenty-five] thirty-five percent
6 lump sum payment of the actuarial equivalent of his or her retirement
7 allowance at the time of retirement.
8 § 2. Notwithstanding any other provision of law to the contrary, none
9 of the provisions of this act shall be subject to section 25 of the
10 retirement and social security law.
11 § 3. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, section 50:
This bill would allow larger lump sum payments to be made under the
Partial Lump Sum (PLS) program for certain members of the New York State
and Local Police and Fire Retirement System and the New York State and
Local Employees' Retirement System. Currently, members who are eligible
for the PLS program and who file for service retirement after being
eligible to retire for 5 or more years may elect to receive a partial
lump sum payment of up to 25% of the present value of their actuarially
determined retirement allowance (their "reserve") at retirement, and a
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD11770-08-8
S. 6571--B 2
smaller annual retirement allowance thereafter. This proposal would
allow a member who files for service retirement after being eligible to
retire for 5 or more years to be eligible to receive a partial lump sum
of up to 35% of their reserve in exchange for a reduction in their annu-
al retirement allowance of up to 35% thereafter. For example, a new
retiree with an initial annual pension of $100,000 could have a reserve
of approximately $1.2 million, and could receive a PLS payment of
$420,000 and a reduced annual pension of $65,000.
If this bill is enacted, there would be administrative costs associ-
ated with redesigned estimate and option forms. There would not be costs
associated with the lump sum payment options since payments would be
determined on an actuarially equivalent basis.
However, the ratcheting upward of the maximum lump sum benefit is
eroding the original intent of the pension plan, first presented in the
March 30, 1920 Report of the Commission on Pensions, namely, that "a
satisfactory pension plan must provide as a minimum, a superannuation
benefit", which is defined as a lifetime monthly payment made to someone
who is retired from work.
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, 2017 actuarial valu-
ation. Distributions and other statistics can be found in the 2017
Report of the Actuary and the 2017 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2015,
2016, and 2017 Annual Report to the Comptroller on Actuarial Assump-
tions, 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, 2017
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 estimate, dated January 4, 2018, and intended for use only during
the 2018 Legislative Session, is Fiscal Note No. 2018-27, prepared by
the Actuary for the New York State and Local Retirement System.
