STATE OF NEW YORK
________________________________________________________________________
7421
IN SENATE
April 29, 2016
___________
Introduced by Sen. GOLDEN -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
AN ACT to amend the general municipal law, in relation to creating a
state-wide, uniform, minimum accidental disability benefit of three-
quarters of final average salary for all police officers
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Legislative findings and declaration. The legislature here-
2 by finds and declares that there is a substantial state interest in the
3 fair and equitable treatment of police officers throughout the state who
4 are disabled as a result of an accident incurred in the line of duty.
5 That substantial state interest would be furthered by establishing and
6 maintaining a minimum level of accidental disability benefits for police
7 officers in New York state who are rendered disabled by an accident in
8 the performance of their duties. The legislature also finds and declares
9 that accidental disability retirement benefits of less than three-quar-
10 ters of final average salary to police officers injured as a result of
11 an accident incurred in the line of duty do not adequately compensate
12 disabled police officers for the sacrifice of their health and liveli-
13 hood in the cause of public service. Therefore, the legislature declares
14 the necessity for the enactment of this act to establish a minimum acci-
15 dental disability retirement benefit of three-quarters of final average
16 salary for police officers throughout the state.
17 § 2. The general municipal law is amended by adding a new section
18 209-ff to read as follows:
19 § 209-ff. Minimum accidental disability retirement allowance for
20 policemen in cities, towns and villages who are members of a police
21 pension or retirement system. 1. As used in this section, the term
22 "police accidental disability retirement allowance" shall mean the
23 allowance granted to any person who is an officer or member of the
24 uniformed force or a police department of any city, town or village, and
25 who is a member of a police pension or retirement system, pursuant to
26 section five hundred seven of the retirement and social security law, or
27 section three hundred sixty-three of the retirement and social security
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD15045-02-6
S. 7421 2
1 law, or any similar accidental disability pension provided by the
2 pension fund of which he or she is a member.
3 2. Notwithstanding the provisions of any general, special or local
4 law, charter or administrative code to the contrary, and in lieu of any
5 lesser amount otherwise prescribed, any police accidental disability
6 retirement allowance shall not be less than three-quarters of the member
7 of the police pension or retirement system's final average salary or
8 annual compensation, as such final average salary or annual compensation
9 is otherwise prescribed by law. Such allowance shall not be reduced,
10 diminished or offset by a member's receipt of, or eligibility for,
11 social security benefits.
12 3. Notwithstanding the provisions of any general, special or local
13 law, charter or administrative code to the contrary, and in lieu of any
14 amount prescribed by section five hundred ten of the retirement and
15 social security law or otherwise prescribed by law, a cost of living
16 adjustment shall be payable on police accidental disability retirement
17 allowances under the same terms and conditions as provided in such
18 systems immediately prior to July first, two thousand nine.
19 4. Notwithstanding the provisions of any general, special or local
20 law, charter or administrative code to the contrary, subdivision d of
21 section five hundred seven of the retirement and social security law
22 shall not apply to members of a police pension or retirement system who
23 receive police accidental disability retirement allowances. Such members
24 shall be subject to post-retirement medical examinations, and where
25 applicable, modification of retirement allowances following such exam-
26 inations, in the same manner and under the same conditions prescribed by
27 law immediately prior to July first, two thousand nine for members of
28 such police pension or retirement system.
29 § 3. This act shall take effect immediately.
FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: With respect to the New York City
Police Pension Fund (POLICE), the proposed legislation would amend the
General Municipal Law (GML) by adding a new section 209-ff to provide a
revised benefit payable as the result of an Accidental Disability
Retirement (ADR) to Tier 3 and Revised Tier 3 members. The proposed
legislation would also make these members who retire on an ADR, subject
to the same post-retirement medical examinations and subject to the same
modification of retirement allowances following such examinations, as
Tier 2 POLICE members.
The Effective Date of the proposed legislation would be the date of
enactment.
For purposes of this Fiscal Note, all POLICE Members subject to Arti-
cle 14 of the RSSL will be referred to as "Tier 3 POLICE Members." Of
those Tier 3 POLICE members who have a date of membership prior to April
1, 2012, they will be referred to as "Original Tier 3 POLICE Members."
Of those Tier 3 POLICE Members who have a date of membership on or after
April 1, 2012, they will be referred to as "Revised Tier 3 POLICE
Members."
IMPACT ON ADR BENEFITS PAYABLE: The current ADR benefits for Tier 3
POLICE Members are equal to the greater of:
* 50% multiplied by Final Average Salary,
Reduced by:
* 50% of Primary Social Security disability benefit or Primary Social
Security benefits, whichever begins first (determined under RSSL Section
511), and
* 100% of Workers' Compensation benefits (if any).
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Final Average Salary is a Three-Year average (FAS3) for Original Tier
3 POLICE Members and a Five-year average (FAS5) for Revised Tier 3
POLICE Members.
It is the understanding of the Actuary that POLICE Members are not
covered by Workers' Compensation.
Under the proposed legislation, if enacted, the ADR benefit for Tier 3
POLICE Members would be revised to equal a retirement allowance equal
to:
* 75% multiplied by FAS,
* Reduced by 100% of Workers' Compensation benefits (if any).
In addition, the proposed legislation would not apply the Escalation
available under RSSL Section 510 to ADR benefits for Tier 3 POLICE
members. However, such ADR benefits would still be eligible for COLA
under Chapter 125 of the Laws of 2000.
Tier 3 POLICE Members who are POLICE members prior to the effective
date of this proposed legislation would have the option of remaining
under the current ADR benefits or electing to be covered under the
proposed ADR benefits.
Eligibility for ADR will be unchanged from the current eligibility
provisions for Tier 3. Therefore, the ability to be eligible for and to
utilize the presumptive conditions that qualify for ADR that is avail-
able to Tier 1 and Tier 2 POLICE Members will not be available for Tier
3 POLICE Members.
Finally, the proposed legislation would also make these members who
retire on an ADR, subject to the same post-retirement medical examina-
tions and subject to the same modification of retirement allowances
following such examinations, as Tier 2 POLICE members.
FINANCIAL IMPACT - CHANGES IN PROJECTED ACTUARIAL PRESENT VALUE OF
FUTURE EMPLOYER CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For
purposes of this Fiscal Note, it is assumed that the changes in the
Actuarial Present Value (APV) of benefits (APVB), APV of member contrib-
utions, the Unfunded Actuarial Accrued Liability (UAAL) and APV of
future employer contributions would be reflected for the first time in
the June 30, 2015 actuarial valuation of POLICE. Under the One-Year Lag
Methodology (OYLM), the first year that changes in benefits for Tier 3
POLICE Members could impact employer contributions to POLICE would be
Fiscal Year 2017.
In accordance with ACNY Section 13.638.2(k-2), new UAAL attributable
to benefit changes are to be amortized as determined by the Actuary but
generally over the remaining working lifetime of those impacted by the
benefit changes. As of June 30, 2015, the remaining working lifetime of
the Tier 3 POLICE Members is approximately 18 years. Recognizing that
this period will decrease over time as the group of Tier 3 Members
matures, for purposes of this Fiscal Note, the Actuary has elected to
amortize the change in UAAL over a 15-year period (14 payments under the
OYLM Methodology).
Table 1 presents an estimate of the increases in the APV of future
employer contributions and in employer contributions to POLICE for
Fiscal Years 2017 through 2021 due to the changes in ADR provisions for
Tier 3 POLICE Members assuming no increase in the incidence of ADRs and
based on the applicable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on POLICE
If Certain Revisions are Made to
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Provisions for ADR Benefits
for Tier 3 POLICE Members
($ Millions)
Fiscal Year Increase in APV of Increase in Employer
Future Employer Contributions Contributions
2017 $182.5 $21.7
2018 215.9 25.0
2019 243.4 27.7
2020 271.8 30.4
2021 300.4 32.8
For illustrative purposes, Table 2 presents an estimate of the
increases in the APV of future employer contributions and in employer
contributions to POLICE for Fiscal Years 2017 through 2021 due to the
changes in ADR provisions for Tier 3 POLICE Members assuming the change
in the ADR benefit provisions would increase the incidence of ADRs to
equal the midpoint of the current Tier 2 and Tier 3 probabilities of ADR
for POLICE members:
Table 2
Estimated Financial Impact on POLICE
If Certain Revisions are Made to
Provisions for ADR Benefits
for Tier 3 POLICE Members
($ Millions)
Increase in APV of
Future Employer Increase in Employer
Fiscal Year Contributions Contributions
2017 $209.7 $27.0
2018 245.9 30.9
2019 274.7 34.1
2020 304.5 37.2
2021 334.1 40.0
The estimated increases in employer contributions shown in Table 1 and
Table 2 are based upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Salary increases consistent with those used in projections presented
to the New York City Office of Management and Budget for use in Febru-
ary, 2016 (Preliminary Projections).
* New entrant salaries consistent with those used in the Preliminary
Projections.
OTHER COSTS: Not measured in this Fiscal Note are the following poten-
tial costs:
* The initial, additional administrative costs of POLICE and other New
York City agencies to implement the proposed legislation.
* The potential impact if this proposed legislation were to be
extended to other public safety employees (e.g., firefighters).
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* The impact of this proposed legislation on Other Postemployment
Benefit (OPEB) costs.
CENSUS DATA: The starting census data used for the calculations
presented herein is the census data used in the Preliminary June 30,
2015 (Lag) actuarial valuation of POLICE to determine the Preliminary
Fiscal Year 2017 employer contributions.
The 3,337 Original Tier 3 POLICE Members as of June 30, 2015 had an
average age of approximately 30, average service of approximately 4.2
years and an average salary of approximately $71,900.
The 5,124 Revised Tier 3 POLICE Members as of June 30, 2015 had an
average age of approximately 28, average service of approximately 1.6
years and an average salary of approximately $55,900.
Overall, the 8,461 Tier 3 POLICE Members as of June 30, 2015 had an
average age of approximately 29, average service of approximately 2.6
years, and an average salary of approximately $62,200.
ACTUARIAL ASSUMPTIONS AND METHODS: The additional employer contrib-
utions presented herein have been calculated based on the actuarial
assumptions and methods in effect for the Preliminary June 30, 2015
(Lag) actuarial valuations used to determine the Preliminary Fiscal Year
2017 employer contributions of POLICE.
It has been further assumed that all Tier 3 POLICE Members who became
members prior to the effective date of the proposed legislation will
choose to be covered by the new disability provisions.
The results shown in Table 1 above assume that here is no change in
the incidence of ADRs as a result of the change in ADR provisions. The
results shown in Table 2 above assume that the probabilities of ADR for
Tier 3 POLICE Members will equal the midpoint of the current Tier 2 and
Tier 3 probabilities of ADR for POLICE members.
The actuarial valuation methodology does not include a calculation of
the value of an offset for Workers' Compensation benefits as it is the
understanding of the Actuary that POLICE Members are not covered by such
benefits.
Employer contributions under current methodology have been estimated
assuming the additional APVB would be financed through future normal
contributions including an amortization of the new UAAL attributable to
this proposed legislation over a 15-year period (14 payments under the
OYLM Methodology).
New entrants were projected to replace the POLICE members expected to
leave the active population to maintain a steady-state population.
For purposes of estimating the impact of Escalation for retired Tier 3
POLICE Members, an assumption of 2.5% was used, which is consistent with
the underlying Consumer Price Inflation (CPI) assumption of 2.5% per
year.
This compares with the current Chapter 125 of the Laws of 2000 COLA
assumption of 1.5% per year (i.e., 50% of CPI adjusted to recognize 1.0%
minimum and 3.0% maximum) on the first $18,000 of benefit.
Table 3 presents the total number of active employees of POLICE used
in the projections, assuming a level work force, and the cumulative
number (i.e., net of withdrawals) of Revised Tier 3 Members as of each
June 30 from 2015 through 2019.
Table 3
Surviving Actives from Census Data on June 30, 2015
and
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Cumulative Tier 3 POLICE Members from 2015
Used in the Projections*
Original Revised
June 30 Tier 1&2 Tier 3 Tier 3 Total
2015 25,974 3,337 5,124 34,435
2016 23,902 3,246 7,287 34,435
2017 22,097 3,158 9,108 34,435
2018 20,192 3,076 11,167 34,435
2019 18,469 2,999 12,967 34,435
* Total active members included in the projections assume a level work
force based on the June 30, 2015 (Lag) actuarial valuation census data
and assume no increase in the probabilities of ADR.
STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, and the Chief Actu-
ary for the New York City Retirement Systems. I am an Associate of the
Society of Actuaries, a Fellow of the Conference of Consulting Actuaries
and a Member of the American Academy of Actuaries. I meet the Qualifica-
tion Standards of the American Academy of Actuaries to render the actu-
arial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2016 Legislative Session. It is Fiscal Note 2016-24, dated
April 25, 2016 prepared by the Chief Actuary of the New York City Police
Pension Fund.
