Provides up to three years of service credit to members of public retirement systems of the state for military service rendered during times of peace; removes requirement that such military service occur during specified periods of hostilities; requires such members have at least five years of credited service, not including military service.
STATE OF NEW YORK
________________________________________________________________________
7839
IN SENATE
June 13, 2014
___________
Introduced by Sen. LARKIN -- read twice and ordered printed, and when
printed to be committed to the Committee on Civil Service and Pensions
AN ACT to amend the retirement and social security law, in relation to
providing credit to members of public retirement systems of the state
for military service
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 1000 of the retirement and social security law, as
2 added by chapter 548 of the laws of 2000, subdivision 9 as added by
3 chapter 547 of the laws of 2002 and subdivision 10 as added by chapter
4 18 of the laws of 2012, is amended to read as follows:
5 § 1000. Military service credit. Notwithstanding any law to the
6 contrary, a member of a public retirement system of the state, as
7 defined in subdivision twenty-three of section five hundred one of this
8 chapter, shall be eligible for credit for military service as hereinaft-
9 er provided:
10 1. A member, upon application to such retirement system, may obtain a
11 total not to exceed three years of service credit for up to three years
12 of military duty, as defined in section two hundred forty-three of the
13 military law, if the member was honorably discharged from the military
14 [and all or part of such military service was rendered during the
15 following periods: (a) commencing December seventh, nineteen hundred
16 forty-one and terminating December thirty-first, nineteen hundred
17 forty-six; (b) commencing June twenty-seventh, nineteen hundred fifty
18 and terminating January thirty-first, nineteen hundred fifty-five; or
19 (c) commencing February twenty-eighth, nineteen hundred sixty-one and
20 terminating May seventh, nineteen hundred seventy-five;
21 2. A member, upon application to such retirement system, may obtain a
22 total not to exceed three years of service credit for up to three years
23 of military duty, as defined in section two hundred forty-three of the
24 military law, if honorably discharged therefrom, if all or part of such
25 services was rendered in the military conflicts referenced below, as
26 follows:
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD01368-10-4
S. 7839 2
1 (a) hostilities participated in by the military forces of the United
2 States in Lebanon, from the first day of June, nineteen hundred eighty-
3 three to the first day of December, nineteen hundred eighty-seven, as
4 established by receipt of the armed forces expeditionary medal, the navy
5 expeditionary medal, or the marine corps expeditionary medal;
6 (b) hostilities participated in by the military forces of the United
7 States in Grenada, from the twenty-third day of October, nineteen
8 hundred eighty-three to the twenty-first day of November, nineteen
9 hundred eighty-three, as established by receipt of the armed forces
10 expeditionary medal, the navy expeditionary medal, or the marine corps
11 expeditionary medal;
12 (c) hostilities participated in by the military forces of the United
13 States in Panama, from the twentieth day of December, nineteen hundred
14 eighty-nine to the thirty-first day of January, nineteen hundred ninety,
15 as established by receipt of the armed forces expeditionary medal, the
16 navy expeditionary medal, or the marine corps expeditionary medal; or
17 (d) hostilities participated in by the military forces of the United
18 States, from the second day of August, nineteen hundred ninety, to the
19 end of such hostilities in case of a veteran who served in the theater
20 of operations including Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the
21 United Arab Emirates, Oman, the Gulf of Aden, the Gulf of Oman, the
22 Persian Gulf, the Red Sea, and the airspace above these locations].
23 [3] 2. A member must have at least five years of credited service (not
24 including service granted hereunder) to be eligible to receive credit
25 under this section.
26 [4] 3. To obtain such credit, a member shall pay such retirement
27 system, for deposit in the fund used to accumulate employer contrib-
28 utions, a sum equal to the product of the number of years of military
29 service being claimed and three percent of such member's compensation
30 earned during the twelve months of credited service immediately preced-
31 ing the date that the member made application for credit pursuant to
32 this section. If permitted by rule or regulation of the applicable
33 retirement system, the member may pay such member costs by payroll
34 deduction for a period which shall not exceed the time period of mili-
35 tary service to be credited pursuant to this section. In the event the
36 member leaves the employer payroll prior to completion of payment, he or
37 she shall forward all remaining required payments to the appropriate
38 retirement system prior to the effective date of retirement. If the full
39 amount of such member costs is not paid to the appropriate retirement
40 system prior to the member's retirement, the amount of service credited
41 shall be proportional to the total amount of the payments made prior to
42 retirement.
43 [5] 4. In no event shall the credit granted pursuant to this section,
44 when added to credit granted for military service with any retirement
45 system of this state pursuant to this or any other provision of law,
46 exceed a total of three years.
47 [6] 5. To be eligible to receive credit for military service under
48 this section, a member must make application for such credit before the
49 effective date of retirement. [Notwithstanding the foregoing provisions
50 of this subdivision, an individual who retired on or after December
51 twenty-first, nineteen hundred ninety-eight and before the effective
52 date of this section may make application for credit pursuant to this
53 section within one year following the effective date of this section, in
54 which event, the cost to the retiree would be based on the twelve month
55 period immediately preceding retirement.]
S. 7839 3
1 [7] 6. All costs for service credited to a member pursuant to this
2 section, other than the member costs set forth in subdivision [three]
3 two of this section, shall be paid by the state and all employers which
4 participate in the retirement system in which such member is granted
5 credit.
6 [8] 7. A member who has purchased military service credit pursuant to
7 section two hundred forty-four-a of the military law shall be entitled
8 to a refund of the difference between the amount paid by the member for
9 such purchase and the amount that would be payable if service had been
10 purchased pursuant to this section.
11 [9] 8. Notwithstanding any other provision of law, in the event of
12 death prior to retirement, amounts paid by the member for the purchase
13 of military service credit pursuant to this section shall be refunded,
14 with interest, to the extent the military service purchased with such
15 amounts does not produce a greater death benefit than would have been
16 payable had the member not purchased such credit.
17 Notwithstanding any other provision of law, in the event of retire-
18 ment, amounts paid by the member for the purchase of military service
19 credit pursuant to this section shall be refunded, with interest, to the
20 extent the military service purchased with such amounts does not produce
21 a greater retirement allowance than would have been payable had the
22 member not purchased such credit.
23 [10.] 9. Anything to the contrary in subdivision [four] three of this
24 section notwithstanding, to obtain such credit, a member who first joins
25 a public retirement system of the state on or after April first, two
26 thousand twelve shall pay such retirement system, for deposit in the
27 fund used to accumulate employer contributions, a sum equal to the prod-
28 uct of the number of years of military service being claimed and six
29 percent of such member's compensation earned during the twelve months of
30 credited service immediately preceding the date that the member made
31 application for credit pursuant to this section.
32 § 2. Notwithstanding any other provision of law to the contrary, none
33 of the provisions of this act shall be subject to section 25 of the
34 retirement and social security law.
35 § 3. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would allow up to three (3) years of service credit for
military duty by removing all existing requirements that such military
service be performed during certain war periods, during certain hostil-
ities while in theater of operations or upon the receipt of an expedi-
tionary medal. However, the total service credit granted for active and
peacetime military service shall not exceed three (3) years. Tier 6
members would be required to make a payment of six percent of current
compensation per year of additional service credit granted by this bill.
Members of all other Tiers would be required to make a payment of three
percent of current compensation per year of additional service credit
granted by this bill. Members must have at least five (5) years of cred-
it service (not including military service).
If this bill is enacted, insofar as this proposal affects the New York
State and Local Employees' Retirement System (ERS), it is estimated that
the past service cost will average approximately 12% (9% for Tier 6) of
an affected members' compensation for each year of additional service
credit that is purchased.
Insofar as this proposal affects the New York State and Local Police
and Fire Retirement System (PFRS), it is estimated that the past service
cost will average approximately 17% (14% for Tier 6) of an affected
S. 7839 4
members' compensation for each year of additional service that is
purchased.
The exact number of current members as well as future members who
could be affected by this legislation cannot be readily determined.
ERS Costs: Pursuant to Section 25 of the Retirement and Social Securi-
ty Law, the increased cost to the New York State and Local Employees'
Retirement System would be borne entirely by the State of New York and
would require an itemized appropriation sufficient to pay the cost of
the provision. Since a member can apply for this service credit at any
time prior to retirement, a precise cost can't be determined until each
member, as well as future members, applies for the service credit. Every
year a cost will be determined (and billed to the state) based on those
benefiting from this provisions.
PFRS Costs: These costs would be shared by the State of New York and
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, 2013 actuarial valu-
ation. Distributions and other statistics can be found in the 2013
Report of the Actuary and the 2013 Comprehensive Annual Financial
Report.
The actuarial assumptions and methods used are described in the 2010,
2011, 2012 and 2013 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, 2013
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 statement of actuarial opinion
contained herein.
This estimate, dated October 28, 2013 and intended for use only during
the 2014 Legislative Session, is Fiscal Note No. 2014-5, prepared by the
Actuary for the New York State and Local Employees' Retirement System
and the New York State and Local Police and Fire Retirement System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
With respect to certain New York City Retirement Systems ("NYCRS"),
this proposed legislation would amend New York State Retirement and
Social Security Law ("RSSL") Section 1000 to provide certain members of
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 Fire Department Pension Fund ("FIRE")
the opportunity to obtain additional retirement service credits for
certain Military Service.
This proposed legislation would permit any NYCERS member, prior to the
effective date of retirement, to make application for these additional
service credits.
To obtain such Military Service credits, members would be required to
pay to the appropriate NYCRS, for each year of Military Service
purchased, a sum equal to 3.0% (6.0% for members who first join on and
after April 1, 2012) if such member's compensation earned during the
twelve months of credited service immediately preceding the date that
the member makes application for credit.
S. 7839 5
MEMBERS IMPACTED: Insofar as this proposed legislation relates to the
NYCRS, the number of members who could potentially benefit from this
proposed legislation cannot be readily determined.
IMPACT ON BENEFITS: With respect to the NYCRS, a member who served in
the U.S. military and received an honorable discharge would be permit-
ted, after completing five years of credited service (exclusive of the
service credit that could be purchased under this proposed legislation),
to purchase a maximum of three years of Military Service (inclusive of
any prior purchases of Military Service credit).
In order to purchase the Military Service credits provided in this
proposed legislation, a member must have been honorable discharged
following a period of "military duty" as defined in New York State Mili-
tary Law Section 243.
If a member's Military Service meets these conditions, then that
member would be permitted to purchase a maximum of three years of Mili-
tary Service (inclusive of any previously-received Military Service
credit) attributable to any period of the member's military career.
For purposes of the respective NYCRS, each year of Military Service
credit purchased would apply toward providing the member with a year of
benefit accrual under the particular benefit formula covering the
member.
In certain circumstances, the member also may be entitled to utilize
such Military Service as qualifying service for benefit eligibility
purposes.
For purposes of this Fiscal Note, it has been assumed that members who
purchase Military Service in accordance with this proposed legislation
would generally be entitled to count such service for benefit accrual
purposes and for the purpose of qualifying for benefits.
FINANCIAL IMPACT - OVERVIEW: With respect to an individual member, the
additional cost of this proposed legislation would depend on the length
of all New York City service, age, salary history and Plan in which the
member participates, as well as the number of years of service credit
purchased.
With respect to employers participating in the NYCRS, the ultimate
employer cost of this proposed legislation would be determined by the
increase in benefits to be paid, the impact of certain benefits commenc-
ing earlier and the reduction in certain future member contributions.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: The additional Actuarial
Present Value ("APV") of benefits would depend on the number, salaries,
ages and lengths of Military Service purchased by members who would be
affected by this proposed legislation.
With respect to the NYCRS and based on the census data assumptions
herein, the enactment of this proposed legislation would increase the
Actuarial Present Value ("APV") of benefits ("APVB") by approximately
$178.5 million as of June 30, 2014.
In addition, with respect to the NYCRS, the APV of future member
contributions (primarily attributable to the payments by members of 3.0%
(6.0% for members who first join on and after April 1, 2012) of salary
per year of Military Service purchased) would increase by approximately
$26.5 million when measured as of June 30, 2014.
Consequently, with respect to the NYCRS, the APV of net future employ-
er contributions would increase by approximately $152.0 million as of
June 30, 2014.
FINANCIAL IMPACT - ANNUAL EMPLOYER COSTS: The ultimate cost of a
pension plan is the benefits it pays. With respect to the NYCRS, the
financing of the ultimate cost depends upon the census data used and the
S. 7839 6
actuarial assumptions and methods employed. Assuming that all eligible
members were to purchase the eligible Military Service during Fiscal
Year 2014 and based on the Actuary's actuarial assumptions and methods
in effect as of June 30, 2013, the enactment of this proposed legis-
lation would increase annual employer costs by approximately $18.0
million per year.
FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: The impact of the proposed
legislation on employer contributions would be a function of the census
data (i.e., age/service/salary, etc) reported to the Actuary and of the
timing of the members electing to buy back their Military Service.
With respect to the NYCRS, based on the Actuary's actuarial assump-
tions and methods in effect as of June 30, 2013, the enactment of this
proposed legislation would ultimately increase employer contributions by
approximately the estimated additional annual employer costs.
If applications for buying back Military Service were completed during
Fiscal Year 2014 and the NYCRS census data were updated to reflect this
information by June 30, 2014, then employer contributions would first be
impacted for Fiscal Year 2016.
If the Military Service buybacks were completed after Fiscal Year
2014, then the increase in employer contributions would be delayed.
FINANCIAL IMPACT - SUMMARY: The following table summarizes the esti-
mated financial impact of this proposed legislation on the NYSCRS.
Estimated Financial impact to Allow Members of the NYCRS
to Purchase up to Three Years of Military Service Credit
($ Millions)
Estimated
Additional First Year
Additional APV of Future Additional
Retirement APV of Employer Employer
System Benefits Contributions Costs
NYCERS $ 48.5 $ 40.8 $ 4.8
NYCTRS 14.4 11.9 1.4
BERS 2.0 1.7 0.2
POLICE 92.6 79.4 9.4
FIRE 21.018.22.2
TOTAL $ 178.5 $ 152.0 $ 18.0
ADDITIONAL EMPLOYER COSTS - GENERAL: In general, the real cost of the
enactment of this proposed legislation would be the additional benefits
paid.
OTHER COSTS: Not measured in this Fiscal Note is the impact of this
proposed legislation on the Manhattan and Bronx Surface Transit Operat-
ing Authority ("MaBSTOA") or on State or Local employees with respect to
their participation in the New York State and Local Retirement System
("NYSLRS") or the New York State Teachers' Retirement System ("NYSTRS").
Also, this Fiscal Note does not include analyses of the impact of this
proposed legislation on the expected increases in administrative costs
or costs for Other Post-Employment Benefits ("OPEB").
CENSUS DATA: The census data used for estimates of APV of benefits and
employer contributions presented herein are the active members included
in the June 30, 2013 (Lag) actuarial valuations of NYCERS, NYCTRS, BERS,
POLICE, and FIRE used to determine the Preliminary Fiscal Year 2015
employer contributions.
S. 7839 7
ACTUARIAL ASSUMPTIONS AND METHODS: Additional APV of benefits, of
member contributions and of employer contributions have been estimated
as of June 30, 2014 using various approximating techniques and assump-
tions by the Actuary, including, but not limited to:
* A certain percentage of Veterans being honorably discharged.
* A certain percentage of honorably discharged veterans being disa-
bled.
* Different percentages of members by NYRCS having prior Military
Service.
* Each eligible member purchasing an average of 2.5 years of the Mili-
tary Service.
Changes in employer contributions have been estimated assuming the
increase in the APV of Future Employment Contributions would be financed
over a time period comparable to that used for actuarial losses under
the Entry Age Actuarial Cost Method. Using this approach, the Additional
APV of Future Employer Contributions would be amortized over a closed
15-year period (14 payments under One-Year Lag Methodology) using level
dollar payments.
ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in this
Fiscal Note are those appropriate for budgetary models and determining
annual employer contributions to the NYCES.
However, the economic assumptions that are used for determining
employer contributions do not develop risk-adjusted economic values of
benefits. Such risk-adjusted, economic values of benefits would likely
differ significantly from those developed by the budgetary models.
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the Chief
Actuary for the New York City Retirement Systems. I am a Fellow of the
Society of Actuaries and a Member of the American Academy of Actuaries.
I meet the Qualification Standards of the American Academy of Actuaries
to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2014 Legislative Session. It is Fiscal Note 2014-04, dated
January 30, 2014, 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 Fire Deportment Pension
Fund.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend Section 1000 of the Retirement and Social Secu-
rity Law to allow active members of public retirement systems of New
York State to claim service credit for up to three years of military
service, regardless of when it was performed. Currently, active members
can receive service credit for military service performed, but only
during specified periods of war. A member must have at least five years
of credited service to be eligible and make application for such credit
before the effective date of retirement. To obtain such credit, a member
must make payments as required in Section 1000 of the Retirement and
Social Security Law. Tier 1, 2, 3, 4 and 5 members are required to pay
three percent of salary earned during the twelve months of credited
service immediately preceding the year in which a claim is made for each
year of military service. Tier 6 members are required to pay six percent
of salary earned during the twelve months of credited service immediate-
ly preceding the year in which a claim is made for each year of military
service.
S. 7839 8
It is not possible to determine the total annual cost to the employers
of members of the New York State Teachers' Retirement System since the
total amount of service credit which would be claimed under this bill
cannot be estimated. However, the cost to the employers of members of
the New York State Teachers' Retirement System is estimated to be
$21,700 per year of service credited for Tier 1 and 2 members, $20,500
per year of service credited for Tier 3 and 4 members, $20,400 per year
of service credited for Tier 5 members and $15,000 per year of service
credited for Tier 6 members if this bill is enacted. These costs would
be offset by member payments required under Section 1000 of the Retire-
ment and Social Security Law.
The source of this estimate is Fiscal Note 2014-15 dated February 24,
2014 prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2014 Legislative Session.
I, Richard A. Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American Academy of Actuaries
and I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
