Bill Text: NY A10690 | 2019-2020 | General Assembly | Introduced
Bill Title: Relates to primary social security retirement benefits for certain police/fire members; provides that in the computation of the normal service retirement benefit of police/fire members who are members of the New York city fire department pension fund, there shall be no reduction for the primary social security retirement benefit.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-07-01 - referred to governmental employees [A10690 Detail]
Download: New_York-2019-A10690-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 10690 IN ASSEMBLY July 1, 2020 ___________ Introduced by COMMITTEE ON RULES -- (at request of 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 primary social security retirement benefits for certain police/fire members The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 505 of the retirement and social security law, as 2 amended by chapter 18 of the laws of 2012, is amended to read as 3 follows: 4 § 505. Service retirement benefits; police/fire members, New York city 5 uniformed correction/sanitation revised plan members and investigator 6 revised plan members. a. The normal service retirement benefit for 7 police/fire members, New York city uniformed correction/sanitation 8 revised plan members and investigator revised plan members at normal 9 retirement age shall be a pension equal to fifty percent of final aver- 10 age salary, less fifty percent of the primary social security retirement 11 benefit commencing at age sixty-two, as provided in section five hundred 12 eleven of this article, provided, however, that the computation of the 13 normal service retirement benefit of police/fire members who are members 14 of the New York city fire department pension fund, shall not be reduced 15 by the primary social security retirement benefit commencing at age 16 sixty-two as provided in section five hundred eleven of this article. 17 b. The early service retirement benefit for police/fire members, New 18 York city uniformed correction/sanitation revised plan members and 19 investigator revised plan members shall be a pension equal to two and 20 one-tenths percent of final average salary times years of credited 21 service at the completion of twenty years of service or upon attainment 22 of age sixty-two, increased by one-third of one percent of final average 23 salary for each month of service in excess of twenty years, but not in 24 excess of fifty percent of final average salary, less fifty percent of 25 the primary social security retirement benefit commencing at age sixty- 26 two as provided in section five hundred eleven of this article, 27 provided, however, that New York city police/fire revised plan members, EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD14791-04-0A. 10690 2 1 New York city uniformed correction/sanitation revised plan members and 2 investigator revised plan members shall not be eligible to retire for 3 service prior to the attainment of twenty years of credited service, and 4 provided further that the early service retirement benefit of 5 police/fire members who are members of the New York city fire department 6 pension fund shall not be reduced by the primary social security retire- 7 ment benefit commencing at age sixty-two as provided by section five 8 hundred eleven of this article. 9 c. A police/fire member, a New York city uniformed 10 correction/sanitation revised plan member or an investigator revised 11 plan member who retires with twenty-two years of credited service or 12 less may become eligible for annual escalation of the service retirement 13 benefit if he or she elects to have the payment of his or her benefit 14 commence on the date he or she would have completed twenty-two years and 15 one month or more of service. In such event, the service retirement 16 benefit shall equal two percent of final average salary for each year of 17 credited service, less fifty percent of the primary social security 18 retirement benefit commencing at age sixty-two as provided in section 19 five hundred eleven of this article, provided, however, that the service 20 retirement benefit of police/fire members who are members of the New 21 York city fire department pension fund shall not be reduced by the 22 primary social security retirement benefit commencing at age sixty-two 23 as provided by section five hundred eleven of this article. 24 § 2. Section 511 of the retirement and social security law is amended 25 by adding a new subdivision h to read as follows: 26 h. Notwithstanding any provision of law to the contrary, this section 27 shall not apply to police/fire members who are members of the New York 28 city fire department pension fund who receive a service retirement bene- 29 fit pursuant to section five hundred five of this article or a deferred 30 vested benefit pursuant to section five hundred sixteen of this article. 31 § 3. Subdivision c of section 516 of the retirement and social securi- 32 ty law, as amended by chapter 18 of the laws of 2012, is amended to read 33 as follows: 34 c. The deferred vested benefit of police/fire members, New York city 35 police/fire revised plan members, New York city uniformed 36 correction/sanitation revised plan members or investigator revised plan 37 members shall be a pension commencing at early retirement age equal to 38 two and one-tenths percent of final average salary times years of cred- 39 ited service, less fifty percent of the primary social security retire- 40 ment benefit commencing at age sixty-two, as provided in section five 41 hundred eleven of this article, provided however that the deferred vest- 42 ed benefit of police/fire members who are members of the New York city 43 fire department pension fund and New York city police/fire revised plan 44 members who are members of the New York city fire department pension 45 fund shall not be reduced by the primary social security retirement 46 benefit commencing at age sixty-two as provided by section five hundred 47 eleven of this article. A police/fire member, a New York city 48 police/fire revised plan member, a New York city uniformed 49 correction/sanitation revised plan member or investigator revised plan 50 member may elect to receive his or her vested benefit commencing at 51 early retirement age or age fifty-five. If the vested benefit commences 52 before early retirement age, the benefit shall be reduced by one-fif- 53 teenth for each year, if any, that the member's early retirement age is 54 in excess of age sixty, and by one-thirtieth for each additional year by 55 which the vested benefit commences prior to early retirement age. If 56 such vested benefit is deferred until after such member's normal retire-A. 10690 3 1 ment age, the benefit shall be computed and subject to annual escalation 2 in the same manner as provided for an early retirement benefit pursuant 3 to subdivision c of section five hundred five of this article. 4 § 4. Notwithstanding the provisions of section 13-379 of the adminis- 5 trative code of the city of New York, the provisions of this act shall 6 apply to chapter three of title thirteen of the administrative code of 7 the city of New York. 8 § 5. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: This proposed legislation would amend Sections 505, 511, and 516 of the Retirement and Social Security Law (RSSL) to elimi- nate the offset equal to 50% of the primary social security benefit in the service, early service, and vested retirement benefits for Tier 3 original, revised, and enhanced plan members of the New York City Fire Pension Fund (FIRE). Effective Date: Upon enactment. IMPACT ON BENEFITS: Currently, the Tier 3 normal service retirement, early service retirement, and vested retirement benefits are subject to an offset equal to 50% of the primary social security benefit as defined in RSSL Section 511 beginning at age 62. Under the proposed legislation, if enacted, the offset for such bene- fits would be eliminated resulting in an increase in benefits. FINANCIAL IMPACT - SUMMARY: The financial impact will increase as the impacted populations of Tier 3 members of FIRE increases over time. The estimated financial impact of removing the social security offset as described above results in an increase in Present Value of Future Bene- fits (PVFB) and an increase in the annual employer contributions of FIRE. The estimate of these increases for Fiscal Years 2021 through 2025 based on the applicable actuarial assumptions and methods noted herein, are shown in the table below. Fiscal Increase in Increase in Year Present Value of Employer Contributions Future Benefits ($ Millions) ($ Millions) 2021 $ 56.9 $3.0 2022 $ 68.3 $3.7 2023 $ 80.2 $4.3 2024 $ 93.1 $4.9 2025 $107.1 $5.6 In accordance with Section 13-638.2(k-2) of the Administrative Code of the City of New York (ACCNY), new Unfunded Accrued Liability (UAL) attributable to benefit changes are to be amortized as determined by the Actuary, but are generally amortized over the remaining working lifetime of those impacted by the benefit changes. As of June 30, 2018, the remaining working lifetime of FIRE members subject to Article 14 is approximately 21 years. For the purposes of this Fiscal Note, the increase in the UAL for FIRE was amortized over a 21-year period (20 payments under the One-Year Lag Methodology (OYLM)) using level dollar payments. CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is assumed that the changes in the PVFB and annual employer contributions would be reflected for the first time in the June 30, 2019 actuarial valuation of FIRE. In accordance with the OYLM used to determine employ- er contributions, the increase in employer contributions would first be reflected in Fiscal Year 2021.A. 10690 4 CENSUS DATA: The estimates presented herein are based on the census data used in the Preliminary June 30, 2018 (Lag) actuarial valuations of FIRE to determine the Preliminary Fiscal Year 2020 employer contrib- utions. There are 3,074 active Tier 3 members of FIRE of June 30, 2018 and they have an average age of approximately 30.4 years, average service of approximately 2.6 years, and an average salary of approximately $67,600. ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB 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 contributions of FIRE. New entrants were projected to replace the members expected to leave the active population to maintain a steady-state population. New entrant demographics and future salary increases are consistent with those used in projections for the New York City Office of Management and Budget in April 2019 (Preliminary Projections). Projected headcounts for FIRE as of June 30, 2019 was compared to actual headcount and was determined to be reasonable for this analysis. 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 FIRE, 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 meth- ods 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 FIRE, and other New York City agencies to implement the proposed legislation. * Pension costs for future members of FIRE hired after 7/1/2023. * The impact of this proposed legislation on Other Postemployment Benefit (OPEB) costs. * Cost analyses relating to provisions contained in RSSL Section 500(c). 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 2020-15 dated March 18, 2020 was prepared by the Chief Actuary for the New York City Fire Pension Fund. This estimate is intended for use only during the 2020 Legislative Session.
