Bill Text: NY A07782 | 2019-2020 | General Assembly | Introduced


Bill Title: Relates to allowing certain members of the New York city police pension fund to borrow from contributions.

Spectrum: Partisan Bill (Democrat 17-0)

Status: (Introduced) 2019-05-21 - referred to governmental employees [A07782 Detail]

Download: New_York-2019-A07782-Introduced.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                          7782

                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                      May 21, 2019
                                       ___________

        Introduced by M. of A. ABBATE -- read once and referred to the Committee
          on Governmental Employees

        AN  ACT  to amend the retirement and social security law, in relation to
          allowing certain members of the New York city police pension  fund  to
          borrow from contributions

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Paragraphs 1 and 2 of subdivision b of section 517-c of the
     2  retirement and social security law, paragraph 1 as amended and paragraph
     3  2 as added by chapter 303 of the laws of 2017, are amended  to  read  as
     4  follows:
     5    1.  A  member  of  the  New York state and local employees' retirement
     6  system, the New York state and local police and fire retirement  system,
     7  the  New  York city employees' retirement system [or], the New York city
     8  board of education retirement system or the New York city police pension
     9  fund in active service who has credit for at least one  year  of  member
    10  service  may  borrow, no more than once during each twelve month period,
    11  an amount not exceeding seventy-five percent of the total  contributions
    12  made pursuant to section five hundred seventeen of this article (includ-
    13  ing  interest  credited  at  the rate set forth in subdivision c of such
    14  section five hundred seventeen compounded annually) and  not  less  than
    15  one  thousand  dollars,  provided,  however, that the provisions of this
    16  section   shall   not   apply   to   a   New   York    city    uniformed
    17  correction/sanitation  revised  plan  member  or an investigator revised
    18  plan member.
    19    2. A member of the New York  state  and  local  employees'  retirement
    20  system  who first joins such system on or after January first, two thou-
    21  sand eighteen, or a member of the New York city police pension fund  who
    22  first joins such system on or after January first, two thousand eighteen
    23  in active service who has credit for at least one year of member service
    24  may  borrow,  no  more  than  once  during  each twelve month period, an

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD09957-02-9

        A. 7782                             2

     1  amount, not less than one thousand dollars and which would not cause the
     2  balance owed pursuant to this section, including  any  amounts  borrowed
     3  then  outstanding,  to  exceed  (i)  fifty percent of the member's total
     4  contributions  made  pursuant  to section five hundred seventeen of this
     5  article (including interest credited at the rate set forth  in  subdivi-
     6  sion  c  of such section five hundred seventeen compounded annually); or
     7  (ii) fifty thousand dollars, whichever is less.
     8    § 2. Subdivisions d and i of  section  517-c  of  the  retirement  and
     9  social  security  law, subdivision d as added by chapter 920 of the laws
    10  of 1990 and subdivision i as amended by chapter 426 of the laws of 2018,
    11  are amended to read as follows:
    12    d. The rate of interest payable  upon  loans  made  pursuant  to  this
    13  section  shall:  (1) for members of the New York state and local employ-
    14  ees' retirement system, be one percent less than the valuation  rate  of
    15  interest adopted for such system, however, in no event shall the rate be
    16  less  than  the  rate set forth in subdivision c of section five hundred
    17  seventeen of this article; (2) for members of the New York city  employ-
    18  ees'  retirement  system,  be one percent less than the regular interest
    19  rate established pursuant to  [subdivision  (c)  of  section  13-101.12]
    20  paragraph (c) of subdivision twelve of section 13-101 of the administra-
    21  tive  code of the city of New York for such system, however, in no event
    22  shall the rate be less than the rate  set  forth  in  subdivision  c  of
    23  section five hundred seventeen of this article; [and] (3) for members of
    24  the  New  York city board of education retirement system, be one percent
    25  less than the regular interest rate established pursuant to subparagraph
    26  four of paragraph (b) of  subdivision  sixteen  of  section  twenty-five
    27  hundred  seventy-five  of the education law for such system, however, in
    28  no event shall the rate be less than the rate set forth in subdivision c
    29  of section five hundred seventeen of this article; and (4)  for  members
    30  of  the  New York city police pension fund, be one percent less than the
    31  regular interest rate established pursuant to subdivision b  of  section
    32  13-638.2  of  the  administrative  code of the city of New York for such
    33  system, however, in no event shall the rate be less than  the  rate  set
    34  forth  in  subdivision  c  of  section  five  hundred  seventeen of this
    35  article.  Whenever there is a change in the interest rate, it  shall  be
    36  applicable  to  loans made or renegotiated after the date of such change
    37  in the interest rate.
    38    i. Notwithstanding the provisions of section five hundred  sixteen  of
    39  this  article, whenever a member of such a retirement system, for whom a
    40  loan is outstanding, retires, the retirement allowance  payable  without
    41  optional  modification shall be reduced by a life annuity which is actu-
    42  arially equivalent to the amount of the outstanding loan (all  outstand-
    43  ing  loans  shall continue to accrue interest charges until retirement),
    44  such life annuity being calculated utilizing the interest rate on thirty
    45  year United States treasury bonds as of January first  of  the  calendar
    46  year  of  the  effective date of retirement and the mortality tables for
    47  options available under section five hundred fourteen of this article. A
    48  retiree of the New York city  employees'  retirement  system,  board  of
    49  education  retirement  system of the city of New York, [or] the New York
    50  state and local employees' retirement  system,  or  the  New  York  city
    51  police  pension  fund  whose  benefit  has been so reduced may repay the
    52  outstanding balance of the loan at any time.  Benefits payable after the
    53  repayment of the loan shall not be subject to  the  actuarial  reduction
    54  required by this subdivision.
    55    § 3. This act shall take effect immediately.
          FISCAL NOTE.--Pursuant to Legislative Law, Section 50:

        A. 7782                             3

          We  have  estimated  the  impact  of  the  Loan Bill, on the projected
        employer contributions of the New York City Police Pension Fund. A brief
        summary of the new provisions is outlined below:
          * Members before 1/1/2018 w/ 1+ years of service:
          *  Can  borrow up to 75% of total contributions made (including inter-
        est)
          * Members hired on/after 1/1/2018 w/ 1+ years of service:
          * Can borrow up to 50% to total contributions made  (including  inter-
        est).
          *  If members retired with outstanding loan balance, retirement allow-
        ance is reduced by actuarially equivalent annuity  equal  to  amount  of
        outstanding loan.
          The  table  below  summarizes the additional contributions that result
        from this bill by year.
        (in millions)
        ________________________
        Annual Cost
        ________________________
        2022                7.3
        2023                8.3
        2024                9.3
        2025               10.5
        2026               11.5
          Specific to this bill, participants are assumed to  take  the  maximum
        loan allowable at retirement:
          * 75% of accumulated contributions for members hired before January 1,
        2018
          *  50% of accumulated contributions for members hired after January 1,
        2018
          The assumptions used in this analysis were those released by  the  New
        York  City  Office  of  the  Actuary on January 2, 2019 in the "Proposed
        Changes in Actuarial Assumptions and Methods Used in Determining Employ-
        er Contributions for Fiscal Years Beginning on and After  July  1,  2018
        for  the  New  York City Police Pension Fund" document, and subsequently
        approved by the Police Pension Fund's Board on March 6, 2019.  The  data
        used  to  determine the cost was provided by the Police Pension Fund and
        was a snapshot of the active plan participants as of July 1, 2018.
          This fiscal note, dated May 6, 2019, is intended only for use  in  the
        2019 legislative session.
          The  source  of  this fiscal note is Heidi E. Andorfer, FSA, EA, MAAA,
        Foster & Foster, Actuaries and Consultants, who  is  familiar  with  the
        immediate  and  long-term  aspects of pension calculations and meets the
        Qualification Standards of the American Academy of  Actuaries  necessary
        to render the actuarial opinions contained herein.
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