Bill Text: NY S05656 | 2015-2016 | General Assembly | Introduced
Bill Title: Relates to the disability benefits of members of the New York police and fire pension funds, and the disability benefits of sanitation and correction officers of the NYCERS.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2016-01-06 - REFERRED TO CIVIL SERVICE AND PENSIONS [S05656 Detail]
Download: New_York-2015-S05656-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
5656
2015-2016 Regular Sessions
I N S E N A T E
May 22, 2015
___________
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 retirement and social security law, the administra-
tive code of the city of New York, and the general municipal law, in
relation to the disability benefits of members of the New York city
police and fire pension funds and the disability benefits of sanita-
tion and correction members of the New York City employees' retirement
system
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 1205 of the retirement and social security law, as
2 added by section 1 of part A of chapter 504 of the laws of 2009, is
3 amended to read as follows:
4 S 1205. Recalculation of benefits. Notwithstanding any other provision
5 of law, any member who has joined the retirement system pursuant to the
6 provisions of article fourteen of this chapter on or after July first,
7 two thousand nine may elect to have his or her retirement benefits
8 calculated pursuant to this article by filing [within one hundred twenty
9 days of the effective date of this section] a request for such calcu-
10 lation with the retirement system in the form and manner prescribed by
11 the state comptroller NO LATER THAN JUNE 30, 2016.
12 S 2. Subdivisions a and b of section 13-357 of the administrative code
13 of the city of New York, subdivision a as amended by chapter 438 of the
14 laws of 1986, are amended to read as follows:
15 a. Once each year the board may, and upon his or her own application
16 shall, require any disability pensioner, under the minimum period for
17 service retirement elected by him or her, and who at the time of his or
18 her retirement for disability was an improved benefits plan member, OR
19 ANY DISABILITY PENSIONER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR
20 FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW, AND WHO IS
21 UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF THE
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11299-01-5
S. 5656 2
1 RETIREMENT AND SOCIAL SECURITY LAW FOR POLICE/FIRE MEMBERS to undergo
2 medical examination. Such examination shall be made at the place of
3 residence of such beneficiary or other place mutually agreed upon. Upon
4 the completion of such examination the medical board shall report and
5 certify to the board whether such beneficiary is or is not totally or
6 partially incapacitated physically or mentally and whether he or she is
7 or is not engaged in or able to engage in a gainful occupation. If the
8 board concur in a report by the medical board that such beneficiary is
9 able to engage in a gainful occupation, it shall certify the name of
10 such beneficiary to the appropriate civil service commission, state or
11 municipal, and such commission shall place his or her name as a
12 preferred eligible on such appropriate lists of candidates as are
13 prepared for appointment to positions for which he or she is stated to
14 be qualified. Should such beneficiary be engaged in a gainful occupa-
15 tion, or should he or she be offered city-service as a result of the
16 placing of his or her name on a civil service list, such board shall
17 reduce the amount of his or her disability pension and his or her
18 pension-providing-for-increased-take-home-pay, if any, to an amount
19 which, when added to that then earned by him or her, or earnable by him
20 or her in city-service so offered him or her, shall not exceed the
21 current maximum salary for the title next higher than that held by him
22 or her when he or she was retired. Should the earning capacity of such
23 beneficiary be further altered, such board may further alter his or her
24 pension and his or her pension-providing-for-increased-take-home-pay, if
25 any, to an amount which shall not exceed the rate of pension and his or
26 her pension-providing-for-increased-take-home-pay, if any, upon which he
27 or she was originally retired but which, subject to such limitation,
28 shall equal, when added to that earnable by him or her, the current
29 maximum salary for the title next higher than that held by him or her
30 when he or she was retired. The provisions of this section shall be
31 executed, any provision of the charter or the code to the contrary
32 notwithstanding.
33 b. Should any disability pensioner, under the minimum period for
34 service retirement elected by him or her, and who was an improved bene-
35 fits plan member at the time of his or her retirement for disability, OR
36 ANY DISABILITY PENSIONER RETIRED PURSUANT TO SECTION FIVE HUNDRED SIX OR
37 FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL SECURITY LAW AND WHO IS
38 UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION FIVE HUNDRED ONE OF THE
39 RETIREMENT AND SOCIAL SECURITY LAW FOR POLICE/FIRE MEMBERS, refuse to
40 submit to one medical examination in any year by a physician or physi-
41 cians designated by the medical board, his or her pension and his or her
42 pension-providing-for-increased-take-home-pay, if any, may be discontin-
43 ued until his or her withdrawal of such refusal. Should such refusal
44 continue for one year, all his or her rights in and to such pension and
45 his or her pension-providing-for-increased-take-home-pay, if any, may be
46 revoked by such board.
47 S 3. Section 13-171 of the administrative code of the city of New York
48 is amended by adding a new subdivision c to read as follows:
49 C. THE PROVISIONS OF SUBDIVISIONS A AND B OF THIS SECTION SHALL APPLY
50 TO ANY SANITATION OR CORRECTION MEMBER WHO RETIRED PURSUANT TO SECTION
51 FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THE RETIREMENT AND SOCIAL
52 SECURITY LAW AND WHO IS UNDER EARLY RETIREMENT AGE AS DEFINED IN SECTION
53 FIVE HUNDRED ONE OF THE RETIREMENT AND SOCIAL SECURITY LAW FOR
54 CORRECTION/SANITATION REVISED PLAN MEMBERS.
55 S 4. Section 506 of the retirement and social security law is amended
56 by adding three new subdivisions e, f and g to read as follows:
S. 5656 3
1 E. 1. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
2 GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
3 REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C AND D OF THIS SECTION
4 SHALL NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND WHO
5 ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK CITY POLICE
6 PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGIBLE
7 FOR ORDINARY DISABILITY RETIREMENT PURSUANT TO SECTIONS 13-251 AND
8 13-254 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK, AND SHALL
9 RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
10 (I) AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
11 ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
12 (II) A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE
13 RESERVE-FOR-INCREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTI-
14 TLED, IF ANY; AND
15 (III) A PENSION, WHICH, TOGETHER WITH HIS OR HER ANNUITY AND THE
16 PENSION-PROVIDING-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, SHALL BE EQUAL TO
17 A RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF HIS OR HER FINAL AVERAGE
18 SALARY MULTIPLIED BY THE NUMBER OF YEARS OF CITY-SERVICE CREDITED TO HIM
19 OR HER, BUT NOT LESS THAN (1) ONE-HALF OF HIS OR HER FINAL AVERAGE SALA-
20 RY, IF THE YEARS OF CITY-SERVICE CREDITED TO HIM OR HER ARE TEN OR MORE,
21 OR (2) ONE-THIRD OF HIS OR HER FINAL AVERAGE SALARY, IF THE YEARS OF
22 CITY-SERVICE CREDITED TO HIM OR HER ARE LESS THAN TEN.
23 2. THE PROVISIONS OF SUBDIVISIONS G, H AND I OF SECTION FIVE HUNDRED
24 SEVEN OF THIS ARTICLE SHALL APPLY TO DISABILITY BENEFITS UNDER THIS
25 SUBDIVISION.
26 F. 1. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
27 GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
28 REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C AND D OF THIS SECTION
29 SHALL NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT PENSION FUND
30 WHO ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK FIRE DEPART-
31 MENT PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGI-
32 BLE FOR ORDINARY DISABILITY RETIREMENT PURSUANT TO SECTIONS 13-352 AND
33 13-357 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK, AND SHALL
34 RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
35 (I) AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
36 ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
37 AND
38 (II) A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE
39 RESERVE-FOR-INCREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTI-
40 TLED, IF ANY, AND
41 (III) A PENSION, WHICH TOGETHER WITH HIS OR HER ANNUITY AND THE
42 PENSION-PROVIDING-FOR-INCREASED-TAKE-HOME-PAY, IF ANY, SHALL BE EQUAL TO
43 A RETIREMENT ALLOWANCE EQUAL TO ONE-FORTIETH OF HIS OR HER FINAL AVERAGE
44 SALARY MULTIPLIED BY THE NUMBER OF YEARS OF CITY-SERVICE CREDITED TO HIM
45 OR HER, BUT NOT LESS THAN (1) ONE-HALF OF HIS OR HER FINAL AVERAGE SALA-
46 RY, IF THE YEARS OF CITY-SERVICE CREDITED TO HIM OR HER ARE TEN OR MORE,
47 OR (2) ONE-THIRD OF HIS OR HER FINAL AVERAGE SALARY, IF THE YEARS OF
48 CITY-SERVICE CREDITED TO HIM OR HER ARE LESS THAN TEN.
49 2. THE PROVISIONS OF SUBDIVISIONS G, H AND I OF SECTION FIVE HUNDRED
50 SEVEN OF THIS ARTICLE SHALL APPLY TO DISABILITY BENEFITS UNDER THIS
51 SUBDIVISION.
52 G. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
53 GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
54 REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C AND D OF THIS SECTION
55 SHALL NOT APPLY TO SANITATION AND CORRECTION MEMBERS OF THE NEW YORK
56 CITY EMPLOYEES' RETIREMENT SYSTEM WHO ARE SUBJECT TO THIS ARTICLE. A
S. 5656 4
1 SANITATION OR CORRECTION MEMBER OF THE NEW YORK CITY EMPLOYEES' RETIRE-
2 MENT SYSTEM WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGIBLE FOR
3 ORDINARY DISABILITY RETIREMENT PURSUANT TO SECTION 13-167 OF THE ADMIN-
4 ISTRATIVE CODE OF THE CITY OF NEW YORK AND SHALL RECEIVE A RETIREMENT
5 ALLOWANCE WHICH SHALL BE EQUAL TO THE GREATER OF:
6 (I) ONE-THIRD OF HIS OR HER FINAL AVERAGE SALARY; OR
7 (II) ONE-SIXTIETH OF HIS OR HER FINAL AVERAGE SALARY MULTIPLIED BY THE
8 NUMBER OF YEARS OF HIS OR HER CREDITED SERVICE; PROVIDED, HOWEVER, THAT
9 WHERE SUCH MEMBER IS OTHERWISE ELIGIBLE TO RETIRE FROM SERVICE, AND THE
10 RETIREMENT ALLOWANCE WHICH HE OR SHE WOULD RECEIVE IN THE CASE OF
11 SERVICE RETIREMENT IS LARGER THAN THE RETIREMENT ALLOWANCE HE OR SHE
12 WOULD OTHERWISE RECEIVE UNDER THIS PARAGRAPH OR PARAGRAPH (I) OF THIS
13 SUBDIVISION, HIS OR HER DISABILITY RETIREMENT ALLOWANCE PURSUANT TO THIS
14 SUBDIVISION SHALL BE EQUAL TO THE RETIREMENT ALLOWANCE HE OR SHE WOULD
15 RECEIVE IF HE OR SHE HAD RETIRED FROM SERVICE.
16 S 5. Section 507 of the retirement and social security law is amended
17 by adding three new subdivisions j, k and l to read as follows:
18 J. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR ANY GENERAL,
19 SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR REGULATION
20 TO THE CONTRARY, SUBDIVISIONS A, B, C, D, E, AND F OF THIS SECTION SHALL
21 NOT APPLY TO MEMBERS OF THE NEW YORK FIRE DEPARTMENT PENSION FUND WHO
22 ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK FIRE DEPARTMENT
23 PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGIBLE
24 FOR ACCIDENTAL DISABILITY RETIREMENT PURSUANT TO SECTIONS 13-353,
25 13-354, AND 13-357 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK
26 AND ANY ACCIDENTAL DISABILITY RETIREMENT BENEFITS FOUND IN THE GENERAL
27 MUNICIPAL LAW AND SHALL RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL
28 CONSIST OF:
29 1. AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
30 ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIREMENT;
31 AND
32 2. A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE RESERVE-FOR-IN-
33 CREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTITLED, IF ANY;
34 AND
35 3. A PENSION, OF THREE-QUARTERS OF HIS OR HER FINAL AVERAGE SALARY, IN
36 ADDITION TO THE ANNUITY AND PENSION PROVIDED FOR BY PARAGRAPHS ONE AND
37 TWO OF THIS SUBDIVISION.
38 K. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR OF ANY
39 GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR
40 REGULATION TO THE CONTRARY, SUBDIVISIONS A, B, C, D, E AND F OF THIS
41 SECTION SHALL NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION
42 FUND WHO ARE SUBJECT TO THIS ARTICLE. A MEMBER OF THE NEW YORK CITY
43 POLICE PENSION FUND WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE
44 ELIGIBLE FOR ACCIDENTAL DISABILITY RETIREMENT PURSUANT TO SECTIONS
45 13-215, 13-252 AND 13-254 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW
46 YORK, AND SHALL RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL CONSIST OF:
47 1. AN ANNUITY, WHICH SHALL BE THE ACTUARIAL EQUIVALENT OF HIS OR HER
48 ACCUMULATED CONTRIBUTIONS, IF ANY, AT THE TIME OF HIS OR HER RETIRE-
49 MENT;
50 2. A PENSION WHICH IS THE ACTUARIAL EQUIVALENT OF THE RESERVE-FOR-IN-
51 CREASED-TAKE-HOME-PAY TO WHICH HE OR SHE MAY THEN BE ENTITLED, IF ANY;
52 AND
53 3. A PENSION, OF THREE-QUARTERS OF HIS OR HER FINAL AVERAGE SALARY, IN
54 ADDITION TO THE ANNUITY AND PENSION PROVIDED FOR BY PARAGRAPHS ONE AND
55 TWO OF THIS SUBDIVISION.
S. 5656 5
1 1. NOTWITHSTANDING ANY OTHER PROVISION OF THIS CHAPTER OR ANY GENER-
2 AL, SPECIAL OR LOCAL LAW, CHARTER, ADMINISTRATIVE CODE OR RULE OR REGU-
3 LATION TO THE CONTRARY, SUBDIVISIONS A, B, C, D, E AND F OF THIS SECTION
4 SHALL NOT APPLY TO SANITATION AND CORRECTION MEMBERS OF THE NEW YORK
5 CITY EMPLOYEES' RETIREMENT SYSTEM WHO ARE SUBJECT TO THIS ARTICLE. A
6 SANITATION OR CORRECTION MEMBER OF THE NEW YORK CITY EMPLOYEES' RETIRE-
7 MENT SYSTEM WHO IS SUBJECT TO THIS ARTICLE SHALL INSTEAD BE ELIGIBLE FOR
8 ACCIDENTAL DISABILITY RETIREMENT PURSUANT TO SECTION 13-168 OF THE
9 ADMINISTRATIVE CODE OF THE CITY OF NEW YORK AND ANY ACCIDENTAL DISABILI-
10 TY RETIREMENT BENEFITS FOUND IN THE GENERAL MUNICIPAL LAW AND SHALL
11 RECEIVE A RETIREMENT ALLOWANCE WHICH SHALL BE EQUAL TO THREE-QUARTERS OF
12 FINAL AVERAGE SALARY, SUBJECT TO THE PROVISIONS OF SECTION 13-176 OF THE
13 ADMINISTRATIVE CODE OF THE CITY OF NEW YORK.
14 S 6. Section 510 of the retirement and social security law is amended
15 by adding a new subdivision i to read as follows:
16 I. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS ARTICLE OR THE ADMIN-
17 ISTRATIVE CODE OF THE CITY OF NEW YORK, THE ANNUAL ESCALATION PROVIDED
18 IN THIS SECTION SHALL NOT APPLY TO THE ORDINARY OR ACCIDENTAL DISABILITY
19 RETIREMENT BENEFIT OF MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND
20 OR MEMBERS OF THE NEW YORK FIRE DEPARTMENT PENSION FUND, OR THE ORDINARY
21 OR ACCIDENTAL DISABILITY RETIREMENT BENEFIT OF SANITATION AND CORRECTION
22 MEMBERS OF THE NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, WHO RETIRE
23 PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTI-
24 CLE. THE ORDINARY OR ACCIDENTAL DISABILITY RETIREMENT BENEFIT OF MEMBERS
25 OF THE NEW YORK FIRE DEPARTMENT PENSION FUND WHO RETIRE PURSUANT TO
26 SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF THIS ARTICLE SHALL BE
27 ADJUSTED FOR COST-OF-LIVING PURSUANT TO THE PROVISIONS OF SECTION 13-696
28 OF THE ADMINISTRATIVE CODE OF THE CITY OF NEW YORK.
29 S 7. Subdivision f of section 511 of the retirement and social securi-
30 ty law, as amended by chapter 18 of the laws of 2012, is amended to read
31 as follows:
32 f. This section shall not apply to general members in the uniformed
33 correction force of the New York city department of correction or to
34 uniformed personnel in institutions under the jurisdiction of the
35 department of corrections and community supervision and security hospi-
36 tal treatment assistants, as those terms are defined in subdivision i of
37 section eighty-nine of this chapter, provided, however, that the
38 provisions of this section shall apply to a New York city uniformed
39 correction/sanitation revised plan member, AND THIS SECTION SHALL ALSO
40 NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE PENSION FUND OR THE NEW
41 YORK FIRE DEPARTMENT PENSION FUND, OR SANITATION REVISED PLAN MEMBERS OF
42 THE NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, OR CORRECTION REVISED
43 PLAN MEMBERS OF THE NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM, WHO ARE
44 SUBJECT TO THIS ARTICLE WHO RETIRE ON ORDINARY OR ACCIDENTAL DISABILITY
45 RETIREMENT PURSUANT TO SECTION FIVE HUNDRED SIX OR FIVE HUNDRED SEVEN OF
46 THIS ARTICLE.
47 S 8. Section 512 of the retirement and social security law is amended
48 by adding three new subdivisions e, f and g to read as follows:
49 E. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
50 ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, WITH RESPECT TO MEMBERS OF THE
51 NEW YORK FIRE DEPARTMENT PENSION FUND WHO RETIRE PURSUANT TO SECTIONS
52 FIVE HUNDRED SIX AND FIVE HUNDRED SEVEN OF THIS ARTICLE, A MEMBER'S
53 FINAL AVERAGE SALARY SHALL MEAN THE SALARY EARNED BY SUCH MEMBER DURING
54 THE ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT, EXCLUSIVE OF ANY
55 FORM OF TERMINATION PAY (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTIC-
56 IPATION OF RETIREMENT), OR ANY LUMP SUM PAYMENT FOR DEFERRED COMPEN-
S. 5656 6
1 SATION, SICK LEAVE, OR ACCUMULATED VACATION CREDIT, OR ANY OTHER PAYMENT
2 FOR TIME NOT WORKED (OTHER THAN COMPENSATION RECEIVED WHILE ON SICK
3 LEAVE OR AUTHORIZED LEAVE OF ABSENCE); PROVIDED, HOWEVER, IF THE SALARY
4 OR WAGES EARNED DURING THE ONE YEAR PERIOD IMMEDIATELY PRIOR TO RETIRE-
5 MENT EXCEEDS THAT OF THE PREVIOUS ONE-YEAR PERIOD BY MORE THAN TWENTY
6 PER CENTUM THE AMOUNT IN EXCESS OF TWENTY PER CENTUM SHALL BE EXCLUDED
7 FROM THE COMPUTATION OF FINAL AVERAGE SALARY. IN DETERMINING FINAL AVER-
8 AGE SALARY, ANY MONTH OR MONTHS (NOT IN EXCESS OF THREE) WHICH WOULD
9 OTHERWISE BE INCLUDED IN COMPUTING FINAL AVERAGE SALARY BUT DURING WHICH
10 THE MEMBER WAS ON AUTHORIZED LEAVE OF ABSENCE WITHOUT PAY SHALL BE
11 EXCLUDED FROM THE COMPUTATION OF FINAL AVERAGE SALARY AND THE MONTH OR
12 AN EQUAL NUMBER OF MONTHS IMMEDIATELY PRECEDING SUCH PERIOD SHALL BE
13 SUBSTITUTED IN LIEU THEREOF.
14 F. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
15 ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, WITH RESPECT TO MEMBERS OF THE
16 NEW YORK CITY POLICE PENSION FUND WHO RETIRE PURSUANT TO SECTIONS FIVE
17 HUNDRED SIX AND FIVE HUNDRED SEVEN OF THIS ARTICLE A MEMBER'S FINAL
18 AVERAGE SALARY SHALL MEAN THE SALARY EARNED BY SUCH MEMBER DURING THE
19 ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT, EXCLUSIVE OF ANY FORM
20 OF TERMINATION PAY (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTICIPATION
21 OF RETIREMENT) OR ANY LUMP SUM PAYMENT FOR DEFERRED COMPENSATION, SICK
22 LEAVE, OR ACCUMULATED VACATION CREDIT, OR ANY OTHER PAYMENT FOR TIME NOT
23 WORKED (OTHER THAN COMPENSATION RECEIVED WHILE ON SICK LEAVE OR AUTHOR-
24 IZED LEAVE OF ABSENCE); PROVIDED, HOWEVER, IF THE SALARY OR WAGES EARNED
25 DURING THE ONE-YEAR PERIOD IMMEDIATELY PRIOR TO RETIREMENT EXCEEDS THAT
26 OF THE PREVIOUS ONE-YEAR PERIOD BY MORE THAN TWENTY PER CENTUM, THE
27 AMOUNT IN EXCESS OF TWENTY PER CENTUM SHALL BE EXCLUDED FROM THE COMPU-
28 TATION OF FINAL AVERAGE SALARY. IN DETERMINING FINAL AVERAGE SALARY, ANY
29 MONTH OR MONTHS (NOT IN EXCESS OF THREE) WHICH WOULD OTHERWISE BE
30 INCLUDED IN COMPUTING FINAL AVERAGE SALARY BUT DURING WHICH THE MEMBER
31 WAS ON AUTHORIZED LEAVE OF ABSENCE WITHOUT PAY SHALL BE EXCLUDED FROM
32 THE COMPUTATION OF FINAL AVERAGE SALARY AND THE MONTH OR AN EQUAL NUMBER
33 OF MONTHS IMMEDIATELY PRECEDING SUCH PERIOD SHALL BE SUBSTITUTED IN LIEU
34 THEREOF.
35 G. NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION A OF THIS SECTION, OR
36 ANY OTHER GENERAL, SPECIAL OR LOCAL LAW, WITH RESPECT TO SANITATION AND
37 CORRECTION MEMBERS OF THE NEW YORK CITY EMPLOYEES' RETIREMENT SYSTEM WHO
38 RETIRE PURSUANT TO SECTION FIVE HUNDRED SIX AND FIVE HUNDRED SEVEN OF
39 THIS ARTICLE, A MEMBER'S FINAL AVERAGE SALARY SHALL MEAN THE SALARY
40 EARNED BY SUCH MEMBER DURING ANY THREE CONSECUTIVE YEARS WHICH PROVIDE
41 THE HIGHEST AVERAGE WAGE, EXCLUSIVE OF ANY FORM OF TERMINATION PAY
42 (WHICH SHALL INCLUDE ANY COMPENSATION IN ANTICIPATION OF RETIREMENT), OR
43 ANY LUMP SUM PAYMENT FOR DEFERRED COMPENSATION, SICK LEAVE, OR ACCUMU-
44 LATED VACATION CREDIT, OR ANY OTHER PAYMENT FOR TIME NOT WORKED (OTHER
45 THAN COMPENSATION RECEIVED WHILE ON SICK LEAVE OR AUTHORIZED LEAVE OF
46 ABSENCE); PROVIDED, HOWEVER, IF THE SALARY OR WAGES EARNED DURING ANY
47 YEAR INCLUDED IN THE PERIOD EXCEEDS THAT OF THE AVERAGE OF THE PREVIOUS
48 TWO YEARS BY MORE THAN TEN PER CENTUM, THE AMOUNT IN EXCESS OF TEN PER
49 CENTUM SHALL BE EXCLUDED FROM THE COMPUTATION OF FINAL AVERAGE SALARY.
50 IN DETERMINING FINAL AVERAGE SALARY, ANY MONTH OR MONTHS (NOT IN EXCESS
51 OF THREE) WHICH WOULD OTHERWISE BE INCLUDED IN COMPUTING FINAL AVERAGE
52 SALARY BUT DURING WHICH THE MEMBER WAS ON AUTHORIZED LEAVE OF ABSENCE
53 WITHOUT PAY SHALL BE EXCLUDED FROM THE COMPUTATION OF FINAL AVERAGE
54 SALARY AND THE MONTH OR AN EQUAL NUMBER OF MONTHS IMMEDIATELY PRECEDING
55 SUCH PERIOD SHALL BE SUBSTITUTED IN LIEU THEREOF.
S. 5656 7
1 S 9. Paragraph (b) of subdivision 1 of section 13-353.1 of the admin-
2 istrative code of the city of New York is relettered paragraph (c) and a
3 new paragraph (b) is added to read as follows:
4 (B) IN ORDER TO BE ELIGIBLE FOR THE PRESUMPTION PROVIDED UNDER PARA-
5 GRAPH (A) OF THIS SUBDIVISION, A MEMBER MUST HAVE (I) SUCCESSFULLY
6 PASSED A PHYSICAL EXAMINATION FOR ENTRY INTO PUBLIC SERVICE WHICH FAILED
7 TO DISCLOSE EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH
8 THAT FORMED THE BASIS FOR THE DISABILITY, OR (II) AUTHORIZED RELEASE OF
9 ALL RELEVANT MEDICAL RECORDS, IF THE MEMBER DID NOT UNDERGO A PHYSICAL
10 EXAMINATION FOR ENTRY INTO PUBLIC SERVICE, AND THERE IS NO EVIDENCE OF
11 THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED THE BASIS
12 FOR THE DISABILITY IN SUCH MEDICAL RECORDS PRIOR TO SEPTEMBER 11, 2001.
13 S 10. Section 207-k of the general municipal law, as amended by chap-
14 ter 1046 of the laws of 1973, subdivision a as amended by chapter 654 of
15 the laws of 2006, is amended to read as follows:
16 S 207-k. Disabilities of policemen and firemen in certain cities. a.
17 Notwithstanding the provisions of any general, special or local law or
18 administrative code to the contrary, but except for the purposes of
19 sections two hundred seven-a and two hundred seven-c of this article,
20 the workers' compensation law and the labor law, any condition of
21 impairment of health caused by diseases of the heart, or by a stroke,
22 resulting in total or partial disability or death to a paid member of
23 the uniformed force of a paid police department or fire department,
24 where such paid policemen or firemen are drawn from competitive civil
25 service lists, who successfully passed a physical examination on entry
26 into the service of such respective department, which examination failed
27 to reveal any evidence of such condition, shall be presumptive evidence
28 that it was incurred in the performance and discharge of duty, unless
29 the contrary be proved by competent evidence.
30 b. The provisions of this section shall remain in full force and
31 effect to and including the thirtieth day of June, nineteen hundred
32 seventy-four.
33 C. IN ADDITION, ANY CONDITION OF IMPAIRMENT OF HEALTH CAUSED BY
34 DISEASES OF THE HEART, OR BY A STROKE, RESULTING IN TOTAL OR PARTIAL
35 DISABILITY OR DEATH TO A MEDICAL OFFICER OF THE FIRE DEPARTMENT OF THE
36 CITY OF NEW YORK, SHALL BE PRESUMPTIVE EVIDENCE THAT IT WAS INCURRED IN
37 THE PERFORMANCE AND DISCHARGE OF DUTY, PROVIDED THAT SUCH MEDICAL OFFI-
38 CER AUTHORIZED RELEASE OF ALL RELEVANT MEDICAL RECORDS, AND THERE IS NO
39 EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED
40 THE BASIS FOR THE DISABILITY OR DEATH IN SUCH MEDICAL RECORDS UNLESS THE
41 CONTRARY BE PROVED BY COMPETENT EVIDENCE.
42 S 11. Section 207-kk of the general municipal law, as amended by chap-
43 ter 531 of the laws of 2003, is amended to read as follows:
44 S 207-kk. Disabilities of firefighters in certain cities caused by
45 cancer. A. Notwithstanding any other provisions of this chapter to the
46 contrary, any condition of impairment of health caused by (i) any condi-
47 tion of cancer affecting the lymphatic, digestive, hematological,
48 urinary, neurological, breast, reproductive, or prostate systems or (ii)
49 melanoma resulting in total or partial disability or death to a paid
50 member of a fire department in a city with a population of one million
51 or more, who successfully passed a physical examination on entry into
52 the service of such department, which examination failed to reveal any
53 evidence of such condition, shall be presumptive evidence that it was
54 incurred in the performance and discharge of duty unless the contrary be
55 proved by competent evidence. The provisions of this section shall
S. 5656 8
1 remain in full force and effect to and including the thirtieth day of
2 June, two thousand five.
3 B. IN ADDITION, ANY CONDITION OF IMPAIRMENT OF HEALTH CAUSED BY (I)
4 ANY CONDITION OF CANCER AFFECTING THE LYMPHATIC, DIGESTIVE, HEMATOLOGI-
5 CAL, URINARY, NEUROLOGICAL, BREAST, REPRODUCTIVE, OR PROSTATE SYSTEMS OR
6 (II) MELANOMA RESULTING IN TOTAL OR PARTIAL DISABILITY OR DEATH TO A
7 MEDICAL OFFICER OF THE FIRE DEPARTMENT OF THE CITY OF NEW YORK, SHALL BE
8 PRESUMPTIVE EVIDENCE THAT IT WAS INCURRED IN THE PERFORMANCE AND
9 DISCHARGE OF DUTY, PROVIDED THAT SUCH MEDICAL OFFICER AUTHORIZED RELEASE
10 OF ALL RELEVANT MEDICAL RECORDS, AND THERE IS NO EVIDENCE OF THE QUALI-
11 FYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED THE BASIS FOR THE
12 DISABILITY OR DEATH IN SUCH MEDICAL RECORDS UNLESS THE CONTRARY BE
13 PROVED BY COMPETENT EVIDENCE.
14 S 12. Section 207-p of the general municipal law, as added by chapter
15 641 of the laws of 1999, is amended to read as follows:
16 S 207-p. Performance of duty disability retirement; police and fire
17 department. A. Notwithstanding any other provision of this chapter or
18 administrative code to the contrary, any paid member of a fire depart-
19 ment and/or a paid police department, in a city with a population of one
20 million or more who successfully passed a physical examination upon
21 entry into the service of such department who contracts HIV (where the
22 employee may have been exposed to a bodily fluid of a person under his
23 or her care or treatment, or while the employee examined, transported,
24 rescued or otherwise had contact with such person, in the performance of
25 his or her duties), tuberculosis or hepatitis, will be presumed to have
26 contracted such disease as a natural or proximate result of an acci-
27 dental injury received in the performance and discharge of his or her
28 duties and not as a result of his or her willful negligence, unless the
29 contrary be provided by competent evidence.
30 B. IN ADDITION, ANY MEDICAL OFFICER OF THE FIRE DEPARTMENT OF THE CITY
31 OF NEW YORK WHO CONTRACTS HIV (WHERE THE MEDICAL OFFICER HAS BEEN
32 EXPOSED TO A BODILY FLUID OF A PERSON UNDER HIS OR HER CARE OR TREAT-
33 MENT, OR WHILE THE MEDICAL OFFICER EXAMINED, TRANSPORTED, RESCUED OR
34 OTHERWISE HAD CONTACT WITH SUCH PERSON, IN THE PERFORMANCE OF HIS OR HER
35 DUTIES), TUBERCULOSIS OR HEPATITIS, WILL BE PRESUMED TO HAVE CONTRACTED
36 SUCH DISEASE AS A NATURAL OR PROXIMATE RESULT OF AN ACCIDENTAL INJURY
37 RECEIVED IN THE PERFORMANCE OF HIS OR HER DUTIES AND NOT AS A RESULT OF
38 HIS OR HER WILLFUL NEGLIGENCE, PROVIDED THAT SUCH MEDICAL OFFICER
39 AUTHORIZED RELEASE OF ALL RELEVANT MEDICAL RECORDS, AND THERE IS NO
40 EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED
41 THE BASIS FOR THE DISABILITY IN SUCH MEDICAL RECORDS, UNLESS THE CONTRA-
42 RY BE PROVED BY COMPETENT EVIDENCE.
43 S 13. Section 207-q of the general municipal law, as amended by chap-
44 ter 103 of the laws of 2006, is amended to read as follows:
45 S 207-q. Firefighters; presumption in certain diseases. A. Notwith-
46 standing any provision of this chapter or of any general, special or
47 local law to the contrary, and for the purposes of this chapter, any
48 condition of impairment of health caused by diseases of the lung,
49 resulting in total or partial disability or death to a uniformed member
50 of a paid fire department, where such member successfully passed a phys-
51 ical examination on entry into such service or subsequent thereto, which
52 examination failed to reveal any evidence of such conditions, shall be
53 presumptive evidence that such disability or death (1) was caused by the
54 natural and proximate result of an accident, not caused by such fire-
55 fighter's own negligence and (2) was incurred in the performance and
56 discharge of duty, unless the contrary be proven by competent evidence.
S. 5656 9
1 The provisions of this section shall remain in full force and effect to
2 and including the thirtieth day of June, two thousand eight.
3 B. IN ADDITION, ANY CONDITION OF IMPAIRMENT OF HEALTH CAUSED BY
4 DISEASES OF THE LUNG, RESULTING IN TOTAL OR PARTIAL DISABILITY OR DEATH
5 TO A MEDICAL OFFICER OF THE FIRE DEPARTMENT OF THE CITY OF NEW YORK,
6 SHALL BE PRESUMPTIVE EVIDENCE THAT SUCH DISABILITY OR DEATH (1) WAS
7 CAUSED BY THE NATURAL AND PROXIMATE RESULT OF AN ACCIDENT, NOT CAUSED BY
8 SUCH MEDICAL OFFICER'S OWN NEGLIGENCE AND (2) WAS INCURRED IN THE
9 PERFORMANCE AND DISCHARGE OF DUTY, PROVIDED THAT SUCH MEDICAL OFFICER
10 AUTHORIZED RELEASE OF ALL RELEVANT MEDICAL RECORDS, AND THERE IS NO
11 EVIDENCE OF THE QUALIFYING CONDITION OR IMPAIRMENT OF HEALTH THAT FORMED
12 THE BASIS FOR THE DISABILITY IN SUCH MEDICAL RECORDS, UNLESS THE CONTRA-
13 RY BE PROVED BY COMPETENT EVIDENCE.
14 S 14. This act shall take effect on the sixtieth day after it shall
15 have become a law; provided, however, that the amendments to sections
16 207-k, 207-kk and 207-q of the general municipal law made by sections
17 ten, eleven and thirteen of this act shall not affect the expiration of
18 such sections, as provided in section 480 of the retirement and social
19 security law.
FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
BACKGROUND - DESIGN OF PROPOSED LEGISLATION
* In general, the OA believes that proposed legislation should:
* Be technically accurate,
* Be clear in its intent,
* Be administrable, and
* Meet desired policy objectives.
While the OA cannot provide any legal analysis, the OA has done a
review of the proposed legislation and has some concerns. These concerns
that follow represent the best understanding of the Actuary and staff of
the OA and should not be considered legal interpretations. All of these
concerns and suggestions should be reviewed by Counsel.
For purposes of this letter, all members of the New York City Police
Pension Fund ("POLICE") subject to Article 14 of the Retirement and
Social Security Law ("RSSL") will be referred to as "Tier III POLICE
Members." Of those Tier III POLICE Members who have a date of membership
prior to April 1, 2012, they will be referred to as "Original Tier III
POLICE Members." Of those Tier III POLICE Members who have a date of
membership on or after April 1, 2012, they will be referred to as
"Revised Tier III POLICE Members."
CONCERNS WITH PROPOSED LEGISLATION WITH RESPECT TO ORDINARY DISABILITY
RETIREMENT ("ODR") AND ACCIDENTAL DISABILITY RETIREMENT ("ADR")
* Benefits Compared to Tier I and Tier II
The proposed legislation, if enacted, would revise the ODR and ADR
benefit formulas for Tier III POLICE Members.
It appears that the proposed Tier III ODR benefit formula is intended
to be the same as the ODR benefit available to Tier I and Tier II POLICE
Members (i.e., 1/40 of Final Average Salary ("FAS") multiplied by the
years of service, but not less than (1) one-half of FAS if the years of
service are 10 or more or (2) one-third of FAS if the years of service
are less than 10) where the FAS for Tier III POLICE Members would be
based on a one-year FAS, the same as for Tier II and similar to the rate
of pay for Tier I.
Similarly, it also appears that the proposed ADR benefit formula for
Tier III POLICE Members is intended to be the same as the ADR benefit
available to Tier I and Tier II POLICE Members (i.e., 75% of Final Aver-
age Salary ("FAS")), where the FAS for Tier III POLICE Members would be
S. 5656 10
based on a one-year FAS, the same as for Tier II and similar to the rate
of pay for Tier I.
Note: Tier I and Tier II POLICE Members are also entitled to an addi-
tional 1/60 of total earnings after their 20th anniversary. Given the
proposed statutory references, it is the understanding of the Actuary
that the Tier III POLICE Members impacted by the proposed legislation
would not receive this additional 1/60 of total earnings after 20 years
of service.
POLICE Tier I and Tier II ODR and ADR benefits are subject to Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000 on the
first $18,000 of benefit after five years of Disability Retirement.
Given the proposed statutory references, it is the understanding of
the Actuary that the proposed ODR and ADR benefits for Tier III POLICE
Members would be entitled to the COLA described in the preceding para-
graph, but would NOT be subject to an annual Tier III Escalation
increase on the full benefit immediately from the date of Disability
Retirement.
* Reference to ITHP
The proposed legislation, in defining the revised ODR and ADR bene-
fits, uses the term Increased-Take-Home-Pay ("ITHP").
ITHP is a special benefit provided to Tier I and Tier II members and
is not defined for Tier III members.
Given the history that no Tier III Members have ever received ITHP
benefits, the Actuary has assumed that if the proposed legislation were
enacted, Tier III POLICE Members would not be entitled to ITHP.
* Annuitization of Member Contributions
The proposed legislation would include in the ODR and ADR benefit
formulas for Tier III POLICE Members, a benefit in the form of an annui-
ty equal to the actuarial equivalent of the accumulated Tier III member
contributions at retirement.
Annuitized benefits based directly on member contributions are avail-
able to Tier I and Tier II POLICE Members. However, it is the under-
standing of the Actuary that no current Tier III Member has any benefit
which is defined as an annuitization of accumulated member contrib-
utions.
* General Plan Design: From an administrative and design viewpoint,
the Actuary would suggest that consideration be given to incorporating
enhanced ODR and ADR benefit eligibilities and benefit formulas within
RSSL Article 14, using only Article 14 terminology and structure to
achieve the desired ODR and ADR benefit eligibilities and benefit
levels.
* Presumptive Conditions for ADR
It is the understanding of the Actuary that the proposed legislation,
if enacted, would provide Tier III POLICE Members the ability to be
eligible for and to utilize the presumptive conditions that qualify for
ADR that are available to Tier I and Tier II POLICE Members.
The reasoning behind this understanding is that in the proposed legis-
lation, eligibility conditions for Tier III POLICE members for ODR would
be determined pursuant to the Administrative Code of the City of New
York ("ACNY") Sections 13-216, 13-251 and 13-254 (i.e., those that apply
to Tier I and Tier II POLICE Members), notwithstanding anything to the
contrary.
Similarly, in the proposed legislation, eligibility conditions for
Tier III POLICE Members for ADR would be determined pursuant to ACNY
Sections 13-216, 13-252 and 13-254 (i.e., those that apply to Tier I and
Tier II POLICE Members), notwithstanding anything to the contrary.
S. 5656 11
It is the understanding of the Actuary that in the proposed legis-
lation, eligibility for ODR and ADR would not be pursuant to RSSL
Section 507.e. RSSL Section 507.e provides that a member shall not be
eligible for ODR or ADR unless the member waives the benefits of any
statutory presumptions. Accordingly, it is the understanding of the
Actuary that since under the proposed legislation RSSL Section 507.e
would no longer apply to Tier III POLICE Members, Tier III POLICE
Members would not be required to waive RSSL Section 507.e in order to be
eligible for ODR or ADR benefits. Consequently, the statutory presump-
tions would apply since that have not been waived.
In accordance with the above reasoning, since current Tier III POLICE
Members are required to waive the presumptions pursuant to RSSL Section
507.e, it is the understanding of the Actuary that Tier III POLICE
Members are currently not entitled to presumptive conditions for ADR.
* Consistency Amongst Uniformed Groups
This proposed legislation would cover members of POLICE but not
members of the New York Fire Department Pension Fund ("FIRE") or any
other uniformed groups. Given the historical consistency in benefits
amongst certain uniformed groups, this proposed legislation would likely
lead to demands for similar legislation for at least some other
uniformed groups.
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend Retirement and Social Security Law ("RSSL") Sections 506, 507,
510, 511 and 512 and amend Administrative Code of the City of New York
("ACNY") Section 13-254 to change, for members of the New York City
Police Pension Fund ("POLICE") subject to Article 14 of the RSSL, the
eligibility for and the calculation of Ordinary Disability Retirement
("ODR") benefits and Accidental Disability Retirement ("ADR") benefits.
For purposes of this Fiscal Note, all POLICE members subject to Arti-
cle 14 of the RSSL will be referred to as "Tier III POLICE Members." Of
those Tier III POLICE Members who have a date of membership prior to
April 1, 2012, they will be referred to as "Original Tier III POLICE
Members." Of those Tier III POLICE Members who have a date of membership
on or after April 1, 2012, they will be referred to as "Revised Tier III
POLICE Members."
The Effective Date of the proposed legislation would be the 60th day
after the date of enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
ODR benefits for Tier III POLICE Members are based on:
* Completing five or more years of service, and
* Becoming eligible for Primary Social Security Disability retirement
benefits.
Such ODR benefits are equal to the greater of:
* 33 1/3% of Three-Year Final Average Salary ("FAS3") for Original
Tier III POLICE Members or Five-Year Final Average Salary ("FAS5") for
Revised Tier III POLICE Members, or
* 2% of FAS3 (FAS5 For Revised Tier III POLICE Members) multiplied by
years of credited service (not in excess of 22 years),
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
It is the understanding of the Actuary that POLICE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ODR
benefits for the Tier III POLICE Members would be revised to be the same
S. 5656 12
as those provided in ACNY Sections 13-216, 13-251 and 13-254 (i.e., the
provisions applicable to Tier I and Tier II POLICE members).
In particular, completing five or more years of service would not be
required in order to be eligible for ODR benefits. In other words, there
would not any requirement for any minimum length of service to be
completed in order to be eligible for ODR benefits.
Under the proposed legislation, if enacted, the ODR benefit for Tier
III POLICE Members would be an allowance consisting of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* A pension, which together with the annuity, equal to 1/40 of One-
Year Final Average Salary ("FAS1") multiplied by years of credited
service, but not less than:
* 1/2 of FAS1, if years of credited service are greater than or equal
to 10 years, or
* 1/3 of FAS1, if years of credited service are less than 10 year.
Note: The proposed legislation also states that one component of the
ODR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ODR benefits for Tier III POLICE
Members. However, such ODR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provisions
for ADR benefits for Tier III POLICE Members are based on satisfying
either:
* Being eligible for Social Security Disability retirement benefits
and having become disabled due to an accident sustained in the line of
duty, or
* Being physically or mentally incapacitated as a result of an acci-
dent sustained in the line of duty as determined by the appropriate
administrative authority assigned by POLICE.
As a consequence of RSSL Section 507.e, a Tier III POLICE Member would
not be eligible for ADR unless the member waived the benefits of any
statutory presumptions (e.g., certain heart diseases).
Such ADR benefits are calculated using a formula of 50% multiplied by
FAS3 for Original Tier III POLICE Members or FAS5 for Revised Tier III
POLICE Members less 50% of Primary Social Security disability benefit
(determined under RSSL Section 511) and less 100% of Worker's Compen-
sation benefits (if any).
Note: It is the understanding of the Actuary that POLICE Members are
not covered by Worker's Compensation.
Under the proposed legislation the eligibility requirements for ADR
benefits for Tier III POLICE Members would be revised to be the same as
those provided in ACNY Sections 13-216, 13-252 and 13-254 (i.e., the
provisions applicable to Tier I and Tier II POLICE Members).
In addition, it is the understanding of the Actuary that the proposed
legislation, if enacted, would provide Tier III POLICE Members the abil-
ity to be eligible for and to utilize the statutory presumptions (e.g.,
certain heart diseases) that qualify certain Tier I and Tier II POLICE
Members for ADR.
S. 5656 13
Under the proposed legislation, if enacted, the ADR benefit for Tier
III POLICE Members would be revised to equal a retirement allowance
equal to the sum of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* 75% multiplied by FAS1.
Note: The proposed legislation also states that one component of the
ADR benefit would be the actuarial equivalent annuity of the Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
Also note, it is the understanding of the Actuary that the Tier III
POLICE Members impacted by the proposed legislation would not receive
any additional 1/60 of annual earnings after 20 years of service.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ADR benefits for Tier III POLICE
Members. However, such ADR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES.
Based on the census data and the actuarial assumptions and methods noted
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value ("APV") of benefits ("APVB"),
APV of member contributions, the Unfunded Actuarial Accrued Liability
("UAAL") and APV of future employer contributions as of June 30, 2013
for Tier III POLICE Members.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
Fiscal Note, it is assumed that the changes in APVB, APV of member
contributions, UAAL and APV of future employer contributions would be
reflected for the first time in the June 30, 2013 actuarial valuation of
POLICE.
Under the One-Year Lag Methodology ("OYLM"), the first year that
changes in benefits for Tier III POLICE Members could impact employer
contributions to POLICE would be Fiscal Year 2015.
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, 2013, the remaining working lifetime of
the Tier III POLICE Members is approximately 18 years. Recognizing that
this period will decrease over time as the group of Tier III Members
matures, the Actuary would likely choose to amortize the new UAAL
attributable to this proposed legislation over a 15-year period (14
payments under the OYLM Methodology).
The following Table one presents an estimate of the increases due to
the changes in ODR and ADR provisions for Tier III POLICE Members in the
APV of future employer contributions and in employer contributions to
POLICE for Fiscal Years 2015 through 2019 that would occur based on the
applicable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on POLICE
If Certain Revisions are Made to
Provisions for ODR and ADR Benefits
for Tier III POLICE Members*
S. 5656 14
($ Millions)
Increase in APV of Increase in Employer
Fiscal Year Future Employer Contributions Contributions
2015 $272.3 $35.7
2016 378.7 47.2
2017 469.6 56.9
2018 552.8 65.5
2019 622.9 72.2
* Based on actuarial assumptions and methods set forth in the Actuarial
Assumptions and Method Section. Also, based on the projection assump-
tions as described herein.
ODR and ADR benefits are NOT subject to Tier III Escalation (RSSL
Section 510).
The estimated increases in employer contributions shown in Table 1 are
based upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget
("NYCOMB") for use in the January 2015 Financial Plan ("Updated Prelimi-
nary Projections").
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
As of each future actuarial valuation date, the current "closed group"
actuarial assumptions and valuation methodology are used.
Under this methodology only Plan participants as of each actuarial
valuation date are utilized to determine APVs, employer costs and
employer contributions.
FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
Normal Costs can provide a useful basis to compare the value of alterna-
tive benefit programs.
For each member who enters POLICE, there is a theoretical net annual
employer cost to be paid for such member while such member remains
actively employed (i.e., the Employer Entry Age Normal Cost (referred to
hereafter as "EEANC")).
In addition, such EEANC may be expressed as a percentage of salary
earned over a working lifetime and referred to as the Employer Entry Age
Normal Rate (referred to hereafter as "EEANR").
Under the proposed legislation and based on the actuarial assumptions
noted herein, the EEANC and EEANR of Tier III POLICE Members would be
greater than the EEANC and EEANR for comparable Tier III POLICE Members
entering at the same attained age and gender under the current POLICE
provisions.
Table 2A shows a summary of the change in EEANC for Original Tier III
POLICE Members for entry ages 25, 30 and 35 determined as of the most
recent date of published EEANR calculations:
Table 2A
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012*
S. 5656 15
To Implement Certain ODR and ADR Provisions for
Original Tier III POLICE Members
Under Proposed Legislation
and Under Current Law
EEANR Under Proposed Legislation**
Entry Age 25 Entry Age 30 Entry Age 35
Retirement
System Male Female Male Female Male Female
POLICE 23.91% 24.74% 25.15% 26.14% 27.27% 28.46%
EEANR Under Current Law
POLICE 20.92% 21.75% 20.73% 21.71% 20.50% 21.63%
Increase in EEANR Due to Proposed Legislation
POLICE 2.99% 2.99% 4.42% 4.43% 6.77% 6.83%
* Based on salaries paid over entire working lifetime. EEANR do not vary
significantly over time, absent benefit and/or actuarial assumption
changes.
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted here-
in including changes in assumptions for ADR. ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510).
Table 2B shows a summary of the change in EEANC for Revised Tier III
POLICE Members for entry ages 25, 30 and 35 determined as of the most
recent date of published EEANR calculations:
Table 2B
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012*
To Implement Certain ODR and ADR Provisions for
Revised Tier III POLICE Members
Under Proposed Legislation
and Under Current Law
EEANR Under Proposed Legislation**
Entry Age 25 Entry Age 30 Entry Age 35
Retirement
System Male Female Male Female Male Female
POLICE 23.36% 24.17% 24.68% 25.64% 26.90% 28.07%
EEANR Under Current Law
POLICE 19.91% 20.71% 19.66% 20.59% 19.38% 20.46%
Increase in EEANR Due to Proposed Legislation
S. 5656 16
POLICE 3.45% 3.46% 5.02% 5.05% 7.52% 7.61%
* Based on salaries paid over entire working lifetime. EEANR do not vary
significantly over time, absent benefit and/or actuarial assumption
changes.
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted here-
in including changes in assumptions for ADR, ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510).
OTHER COSTS: Not measured in this Fiscal Note are the following:
* 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).
* The impact of this proposed legislation on Other Postemployment
Benefit ("OPEB") costs.
CENSUS DATA: The starting census data used for the calculations
presented herein are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of POLICE used under the OYLM to
determine the Updated Preliminary Fiscal Year 2015 employer contrib-
utions.
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of POLICE.
The 3,601 Original Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 28, average service of approximately 2.2
years and an average salary of approximately $63,000.
The 1,916 Revised Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 27, average service of approximately 0.6
years and an average salary of approximately $55,000.
Overall, the 5,517 Tier III POLICE Members as of June 30, 2013 had an
average age of approximately 28, average service of approximately 1.7
years, and an average salary of approximately $60,000.
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 June 30, 2013 (Lag) actuarial
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of POLICE and adjusted for revised ADR eligibil-
ity provisions.
The probabilities of accidental disability used for Tier III POLICE
Members in the event statutory presumptions were to apply equal those
currently used for Tier I and Tier II 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.
To the extent that the enactment of this proposed legislation would
cause a greater (lesser) number of Tier III POLICE Members to be reclas-
sified from Ordinary Disability to Accidental Disability Retirement, or
to the extent that Tier III POLICE Members who would not otherwise ever
choose to apply and then receive an Ordinary Disability Retirement bene-
fit or an Accidental Disability Retirement benefit, then the additional
APVB and employer contributions shown herein would be greater (lesser).
S. 5656 17
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 into Tier III POLICE Members were projected to replace
the POLICE members expected to leave the active population to maintain a
steady-state population.
The following 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 III Members
as of each June 30 from 2013 through 2017.
Table 3
Surviving Actives from Census on June 30, 2013
and
Cumulative New Revised Tier III POLICE Members from 2013
Used in the Projections*
Original Revised
June 30 Tier I&II Tier III Tier III Total
2013 29,258 3,601 1,916 34,775
2014 26,784 3,500 4,491 34,775
2015 24,565 3,406 6,804 34,775
2016 22,571 3,314 8,890 34,775
2017 20,937 3,225 10,613 34,775
* Total active members included in the projections assume a level
work force based on the June 30, 2013 (Lag) actuarial valuation census
data. Assumes presumptions apply to Tier III POLICE members.
For purposes of estimating the impact of the Tier III Escalation for
retired Tier III POLICE Members, consistent with an underlying Consumer
Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
of 2.5% per year has been assumed.
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.
For Variable Supplements Fund ("VSF") benefits, it has been assumed
that retroactive lump sum payments of VSF ("DROP payments") would be
payable from the completion of 20 years of service.
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 POLICE.
However, the economic assumptions (current and proposed) 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 Acting
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 Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-02, dated
S. 5656 18
January 30, 2015 prepared by the Acting Chief Actuary of the New York
City Retirement Systems.
FISCAL NOTE.-- Pursuant to Legislative Law, Section 50:
In response to your request received by the Office of the Actuary
("OA") on January 15, 2015, enclosed is a Fiscal Note presenting the
estimated financial impact if proposed legislation similar to
A9975/S7736 which was introduced during the 2014 Legislative Session is
enacted into law during the 2015 Legislative Session.
BACKGROUND - DESIGN OF PROPOSED LEGISLATION
In general, the OA believes that proposed legislation should:
* Be technically accurate,
* Be clear in its intent,
* Be administrable, and
* Meet desired policy objectives.
While the OA cannot provide any legal analysis, the OA has done a
review of the proposed legislation and has some concerns. These concerns
that follow represent the best understanding of the Actuary and staff of
the OA and should not be considered legal interpretations. All of these
concerns and suggestions should be reviewed by Counsel.
Unless otherwise noted, for purposes of this letter the term Tier III
FIRE Members refers to members of the New York Fire Department Pension
Fund ("FIRE") who have a date of membership on or after April 1, 2012
and the one Tier III member of FIRE who has a date of membership on or
after July 1, 2009 and prior to April 1, 2012.
CONCERNS WITH PROPOSED LEGISLATION WITH RESPECT TO ORDINARY DISABILI-
TY RETIREMENT ("ODR") AND ACCIDENTAL DISABILITY RETIREMENT ("ADR")
* Benefits Compared to Tier II: The proposed legislation, if enacted,
would revise the ODR and ADR benefit formulas for Tier III FIRE Members.
It appears that the proposed Tier III ODR benefit formula is intended
to be the same as the ODR benefit available to Tier II FIRE Members
(i.e., 1/40 of Final Average Salary ("FAS") multiplied by the years of
service, but not less than (1) one-half of FAS if the years of service
are 10 or more or (2) one-third of FAS if the years of service are less
than 10) where the FAS for Tier III FIRE Members would be based on a
one-year FAS, the same as for Tier II.
Similarly, it also appears that the proposed ADR benefit formula for
Tier III FIRE Members is intended to be the same as the ADR benefit
available to Tier II FIRE Members (i.e., 75% of Final Average Salary
("FAS")), where the FAS for Tier III FIRE Members would be based on a
one-year FAS, the same as for Tier II.
Note: Tier II FIRE Members are also entitled to an additional 1/60 of
total earnings after their 20th anniversary. Given the proposed statuto-
ry references it is the understanding of the Actuary that the Tier III
FIRE Members impacted by the proposed legislation would not receive this
additional 1/60 of total earnings after 20 years of service.
FIRE Tier II ODR and ADR benefits are subject to Cost-of-Living
Adjustments ("COLA") under Chapter 125 of the Laws of 2000 on the first
$18,000 of benefit after five years of Disability Retirement.
Given the proposed statutory references, it is the understanding of
the Actuary that the proposed ODR and ADR benefits for Tier III FIRE
Members would be entitled to the COLA described in the preceding para-
graph, but would NOT be subject to an annual Tier III Escalation
increase on the full benefit immediately from the date of Disability
Retirement.
* Reference to ITHP: The proposed legislation, in defining the revised
ODR and ADR benefits, uses the term Increased-Take-Home-Pay ("ITHP").
S. 5656 19
ITHP is a special benefit provided to Tier I and Tier II members and
is not defined for Tier III members.
Given the history that no Tier III Members have ever received ITHP
benefits, the Actuary has assumed that if the proposed legislation were
enacted, Tier III FIRE Members would not be entitled to ITHP.
* Annuitization of Member Contributions: The proposed legislation
would include in the ODR and ADR benefit formulas for Tier III FIRE
Members, a benefit in the form of an annuity equal to the actuarial
equivalent of the accumulated Tier III member contributions at retire-
ment.
Annuitized benefits based directly on member contributions are avail-
able to Tier II FIRE Members. However, it is the understanding of the
Actuary that no current Tier III Member has any benefit which is defined
as an annuitization of accumulated member contributions.
* General Plan Design: From an administrative and design viewpoint,
the Actuary would suggest that consideration be given to incorporating
enhanced ODR and ADR benefit eligibilities and benefit formulas within
Retirement and Social Security Law ("RSSL") Article 14, using only Arti-
cle 14 terminology and structure to achieve the desired ODR and ADR
benefit eligibilities and benefit levels.
* Name: The official name of the Pension Fund is the New York Fire
Department Pension Fund.
* Presumptive Conditions for ADR
It is the understanding of the Actuary that the proposed legislation,
if enacted, would provide Tier III FIRE Members the ability to be eligi-
ble for and to utilize the presumptive conditions that qualify for ADR
that are available to Tier I and Tier II FIRE Members.
The reasoning behind this understanding is that in the proposed legis-
lation eligibility conditions for Tier III FIRE members for ODR would be
determined pursuant to the Administrative Code of the City of New York
("ACNY") Sections 13-316, 13-352 and 13-357 (i.e., those that apply to
Tier I and Tier II FIRE Members), notwithstanding anything to the
contrary.
Similarly, in the proposed legislation, eligibility conditions for
Tier III FIRE Members for ADR would be determined pursuant to the ACNY
Sections 13-316, 13-353 and 13-357 (i.e., those that apply to Tier I and
Tier II FIRE Members), notwithstanding anything to the contrary.
It is the understanding of the Actuary that in the proposed legis-
lation, eligibility for ODR and ADR would not be pursuant to RSSL
Section 507.e. RSSL Section 507.e provides that a member shall not be
eligible for ODR or ADR unless the member waives the benefits of any
statutory presumptions. Accordingly, it is the understanding of the
Actuary that since under the proposed legislation RSSL Section 507.e
would no longer apply to Tier III FIRE Members, Tier III FIRE Members
would not be required to waive RSSL Section 507.e in order to be eligi-
ble for ODR or ADR benefits. Consequently, the statutory presumptions
would apply since they have not been waived.
In accordance with the above reasoning, since current Tier III FIRE
Members are required to waive the presumptions pursuant to RSSL Section
507.e, it is the understanding of the Actuary that Tier III FIRE Members
are currently not entitled to presumptive conditions for ADR.
* Consistency Amongst Uniformed Groups
This proposed legislation would cover members of FIRE but not members
of the New York City Police Pension Fund ("POLICE") or any other
uniformed groups. Given the historical consistency in benefits amongst
certain uniformed groups, this proposed legislation would likely lead to
S. 5656 20
demands for similar legislation for at least some other uniformed
groups.
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend Retirement and Social Security Law ("RSSL") Sections 506, 507,
510, 511 and 512 and amend Administrative Code of the City of New York
("ACNY") Section 13-357 to change, for members of the New York Fire
Department Pension Fund ("FIRE") subject to Article 14 of the RSSL, the
eligibility for and the calculation of Ordinary Disability Retirement
("ODR") benefits and Accidental Disability Retirement ("ADR") benefits.
Unless otherwise noted, for purposes of this Fiscal Note the term Tier
III FIRE members refers to members of the New York Fire Department
Pension Fund ("FIRE") who have a date of membership on or after July 1,
2009. Note: Although referred to herein as Tier III members, it should
be noted that members who join FIRE on or after April 1, 2012 are often
referred to as Tier VI members or Revised Tier III members. Also Note:
There is only one Tier III member of FIRE who has a date of membership
on or after July 1, 2009 and prior to April 1, 2012.
The Effective Date of the proposed legislation would be the 60th day
after the date of enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
ODR benefits for Tier III FIRE Members are based on:
* Completing five or more years of service, and
* Becoming eligible for Primary Social Security Disability retirement
benefits.
Such ODR benefits are equal to the greater of:
* 33 1/3% of Five-Year Final Average Salary ("FAS"), or
* 2% of FAS multiplied by years of credited service (not in excess of
22 years),
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
It is the understanding of the Actuary that FIRE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ODR
benefits for Tier III FIRE Members would be revised to be the same as
those provided in ACNY Sections 13-316, 13-352 and 13-357 (i.e., the
provisions applicable to Tier I and Tier II FIRE members).
In particular, completing five or more years of service would not be
required in order to be eligible for ODR benefits. In other words, there
would not be any requirement for any minimum length of service to be
completed in order to be eligible for ODR benefits.
Under the proposed legislation, if enacted, the ODR benefit for Tier
III FIRE Members would be an allowance consisting of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* A pension, which together with the annuity, equal to 1/40 of One-
Year Final Average Salary ("FAS1") multiplied by years of credited
service, but not less than:
** 1/2 of FAS1, if years of credited service are greater than or equal
to 10 years, or
** 1/3 of FAS1, if years of credited service are less than 10 years.
Note: The proposed legislation also states that one component of the
ODR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
S. 5656 21
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ODR benefits for Tier III FIRE
Members. However, such ODR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provisions for
ADR benefits for Tier III FIRE Members are based on satisfying either:
* Being eligible for Social Security Disability retirement benefits
and having become disabled due to an accident sustained in the line of
duty, or
* Being physically or mentally incapacitated as a result of an acci-
dent sustained in the line of duty as determined by the appropriate
administrative authority assigned by FIRE.
As a consequence of RSSL Section 507.e, a Tier III FIRE Member would
not be eligible for ADR unless the member waived the benefits of any
statutory presumptions (e.g., certain heart diseases).
Such ADR benefits are calculated using a formula of 50% multiplied by
FAS less 50% of Primary Social Security disability benefit (determined
under RSSL Section 511) and less 100% of Workers' Compensation benefits
(if any).
Note: It is the understanding of the Actuary that FIRE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ADR
benefits for Tier III FIRE Members would be revised to be the same as
those provided in ACNY Sections 13-316, 13-353 and 13-357 (i.e., the
provisions applicable to Tier I and Tier II FIRE Members).
In addition, it is the understanding of the Actuary that the proposed
legislation, if enacted, would provide that Tier III FIRE Members could
be eligible for and utilize the statutory presumptions (e.g., certain
heart diseases) that qualify certain Tier I and Tier II Fire Members for
ADR.
Under the proposed legislation, if enacted, the ADR benefit for Tier
III FIRE Members would be revised to equal a retirement allowance equal
to the sum of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* 75% multiplied by FAS1.
Note: The proposed legislation also states that one component of the
ADR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
Also note, it is the understanding of the Actuary that the Tier III
FIRE Members impacted by the proposed legislation would not receive any
additional 1/60 of annual earnings after 20 years of service.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ADR benefits for Tier III FIRE
Members. However, such ADR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES.
Based on the census data and the actuarial assumptions and methods noted
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value ("APV") of benefits ("APVB"),
APV of member contributions, the Unfunded Actuarial Accrued Liability
S. 5656 22
("UAAL") and APV of future employer contributions as of June 30, 2013
for Tier III FIRE Members.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
Fiscal Note, it is assumed that the changes in APVB, APV of member
contributions, UAAL and APV of future employer contributions would be
reflected for the first time in the June 30, 2013 actuarial valuation of
FIRE.
Under the One-Year Lag Methodology ("OYLM"), the first year that
changes in benefits for Tier III FIRE Members could impact employer
contributions to FIRE would be Fiscal Year 2015.
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, 2013, the remaining working lifetime of
the Tier III FIRE Members is approximately 24 years. Recognizing that
this period will decrease over time as the group of Tier III Members
matures, the Actuary would likely choose to amortize the new UAAL
attributable to this proposed legislation over a 15-year to 20-year
period (between 14 and 19 payments under the OYLM Methodology). However,
since virtually all of the Tier III FIRE members that would be impacted
by the benefit changes are new entrants, the resulting UAAL would be de
minimis and therefore the amortization period used for the UAAL has very
little impact on the final results.
The following Table 1 presents an estimate of the increases due to the
changes in ODR and ADR provisions for Tier III FIRE Members in the APV
of future employer contributions and in employer contributions to FIRE
for Fiscal Years 2015 through 2019 that would occur based on the appli-
cable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on FIRE
If Certain Revisions are Made to
Provisions for ODR and ADR Benefits
for Tier III FIRE Members*
($ Millions)
Increase in APV of Increase in Employer
Fiscal Year Future Employer Contributions Contributions
2015 $15.7 $1.9
2016 67.7 8.0
2017 119.6 13.4
2018 172.7 18.3
2019 227.0 23.0
* Based on actuarial assumptions and methods set forth in the Actuarial
Assumptions and Method section. Also, based on the projection assumptions
as described herein.
ODR and ADR benefits are NOT subject to Tier III Escalation (RSSL
Section 510).
The estimated increases in employer contributions shown in Table 1 are
based upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
S. 5656 23
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget
("NYCOMB") for use in the January 2015 Financial Plan ("Preliminary
Projections").
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
As of each future actuarial valuation date, the current "closed group"
actuarial assumptions and valuation methodology are used.
Under this methodology only Plan participants as of each actuarial
valuation date are utilized to determine APVs, employer costs and
employer contributions.
FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
Normal Costs can provide a useful basis to compare the value of alterna-
tive benefit programs.
For each member who enters FIRE, there is a theoretical net annual
employer cost to be paid for such member while such member remains
actively employed (i.e., the Employer Entry Age Normal Cost ("EEANC")).
In addition, such EEANC may be expressed as a percentage of salary
earned over a working lifetime and referred to as the Employer Entry Age
Normal Rate ("EEANR").
Under the proposed legislation and based on the actuarial assumptions
noted herein, the EEANC and EEANR of Tier III Fire Members would be
greater than the EEANC and EEANR for comparable Tier III FIRE Members
entering at the same attained age and gender under the current FIRE
provisions.
Table 2 shows a summary of the change in EEANR for Tier III FIRE
Members who have a date of membership on or after April 1, 2012 for
entry ages 25, 30 and 35 with a starting salary of $45,000, determined
as of the most recent date of published EEANR calculations:
Table 2
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012*
To Implement Certain ODR and ADR Provisions for
Tier III FIRE Members with a Membership Date on or After April 1, 2012
Under Proposed Legislation
and
Under Current Law
EEANR Under Proposed Legislation**
Entry Age 25 Entry Age 30 Entry Age 35
Retirement
System Male Female Male Female Male Female
FIRE 21.92% 22.50% 27.31% 28.01% 34.55% 35.31%
EEANR Under Current Law
FIRE 15.94% 16.51% 18.99% 19.68% 21.78% 22.51%
Increase In EEANR Due to Proposed Legislation
S. 5656 24
FIRE 5.98% 5.99% 8.32% 8.33% 12.77% 12.80%
* Based on salaries paid over entire working lifetime. EEANR do not var
significantly over time, absent benefit and/or actuarial assumption
changes.
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted herein
including changes in assumptions for ADR, ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510).
OTHER COSTS: 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.
* The potential impact if this proposed legislation were to be
extended to other public safety employees.
* The impact of this proposed legislation on Other Postemployment
Benefit ("OPEB") costs.
CENSUS DATA: The starting census data use for the calculations
presented herein are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of FIRE used to determine the
Updated Preliminary Fiscal Year 2015 employer contributions.
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of FIRE.
The 169 Tier III FIRE Members as of June 30, 2013 (including the one
Tier III member who has a date of membership prior to April 1, 2012) had
an average age of approximately 27, average service of approximately 0.5
years and an average salary of approximately $48,200.
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 June 30, 2013 (Lag) actuarial
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of FIRE and adjusted for revised ADR eligibility
provisions.
The probabilities of accidental disability used for Tier III FIRE
Members in the event statutory presumptions were to apply equal those
currently used for Tier I and Tier II FIRE 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 FIRE members are not covered by such
benefits.
To the extent that the enactment of this proposed legislation would
cause a greater (lesser) number of Tier III FIRE Members to be reclassi-
fied from Ordinary Disability to Accidental Disability Retirement, or to
the extent that Tier III FIRE Members who would not otherwise ever
choose to apply and then receive an Ordinary Disability Retirement bene-
fit or an Accidental Disability Retirement benefit, then the additional
APVB and employer contributions shown herein would be greater (lesser).
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).
S. 5656 25
New entrants into Tier III FIRE Members were projected to replace the
FIRE members expected to leave the active population to maintain a
steady-state population.
The following Table 3 presents the total number of active employees of
FIRE used in the projections, assuming a level work force, and the cumu-
lative number (i.e., net of withdrawals) of Tier III Members as of each
June 30 from 2013 through 2017.
Table 3
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier III FIRE Members from 2013
Used in the Projections*
June 30 Tier I & II Tier III Total
2013 10,013 169 10,182
2014 9,486 696 10,182
2015 8,988 1,194 10,182
2016 8,509 1,673 10,182
2017 8,055 2,127 10,182
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
Assumes presumptions apply to Tier III FIRE members.
For purposes of estimating the impact of the Tier III Escalation for
retired Tier III FIRE Members, consistent with an underlying Consumer
Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
of 2.5% per year has been assumed.
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.
For Variable Supplements Fund ("VSF") benefits, it has been assumed
that retroactive lump sum payments of VSF ("DROP payments") would be
payable from the completion of 20 years of service.
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 FIRE.
However, the economic assumptions (current and proposed) 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 be the
budgetary models.
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North Jr., am the Acting
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 Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-03, dated
January 30, 2015 prepared by the Acting Chief Actuary of the New York
Fire Department Pension Fund.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
BACKGROUND - DESIGN OF PROPOSED LEGISLATION
In general, the OA believes that proposed legislation should:
S. 5656 26
* Be technically accurate,
* Be clear in its intent,
* Be administrable, and
* Meet desired policy objectives.
While the OA cannot provide any legal analysis, the OA has done a
review of the proposed legislation and has some concerns. These concerns
that follow represent the best understanding of the Actuary and staff of
the OA and should not be considered legal interpretations. All of these
concerns and suggestions should be reviewed by Counsel.
Unless otherwise noted, for purposes of this letter the term Tier III
FIRE Members refers to members of the New York Fire Department Pension
Fund ("FIRE") who have a date of membership on or after April 1, 2012
and the one Tier III member of FIRE who has a date of membership on or
after July 1, 2009 and prior to April 1, 2012.
CONCERNS WITH PROPOSED LEGISLATION WITH RESPECT TO ORDINARY DISABILITY
RETIREMENT ("ODR") AND ACCIDENTAL DISABILITY RETIREMENT ("ADR")
* Benefits Compared to Tier II: The proposed legislation, if enacted,
would revise the ODR and ADR benefit formulas for Tier III FIRE Members.
It appears that the proposed Tier III ODR benefit formula is intended
to be the same as the ODR benefit available to Tier II FIRE Members
(i.e., 1/40 of Final Average Salary ("FAS") multiplied by the years of
service, but not less than (1) one-half of FAS if the years of service
are 10 or more or (2) one-third of FAS if the years of service are less
than 10) where the FAS for Tier III FIRE Members would be based on a
one-year FAS, the same as for Tier II.
Similarly, it also appears that the proposed ADR benefit formula for
Tier III FIRE Members is intended to be the same as the ADR benefit
available to Tier II FIRE Members (i.e., 75% of Final Average Salary
("FAS")), where the FAS for Tier III FIRE Members would be based on a
one-year FAS, the same as for Tier II.
Note: Tier II FIRE Members are also entitled to an additional 1/60 of
total earnings after their 20th anniversary. Given the proposed statuto-
ry references it is the understanding of the Actuary that the Tier III
FIRE Members impacted by the proposed legislation would not receive this
additional 1/60 of total earnings after 20 years of service.
FIRE Tier II ODR and ADR benefits are subject to Cost-of-Living
Adjustments ("COLA") under Chapter 125 of the Laws of 2000 on the first
$18,000 of benefit after five years of Disability Retirement.
Given the proposed statutory references, it is the understanding of
the Actuary that the proposed ODR and ADR benefits for Tier III FIRE
Members would be entitled to the COLA described in the preceding para-
graph, but would NOT be subject to an annual Tier III Escalation
increase on the full benefit immediately from the date of Disability
Retirement.
* Reference to ITHP: The proposed legislation, in defining the revised
ODR and ADR benefits, uses the term Increased-Take-Home-Pay ("ITHP").
ITHP is a special benefit provided to Tier I and Tier II members and
is not defined for Tier III members.
Given the history that no Tier III Members have ever received ITHP
benefits, the Actuary has assumed that if the proposed legislation were
enacted, Tier III FIRE Members would not be entitled to ITHP.
* Annuitization of Member Contributions: The proposed legislation
would include in the ODR and ADR benefit formulas for Tier III FIRE
Members, a benefit in the form of an annuity equal to the actuarial
equivalent of the accumulated Tier III member contributions at retire-
ment.
S. 5656 27
Annuitized benefits based directly on member contributions are avail-
able to Tier II FIRE Members. However, it is the understanding of the
Actuary that no current Tier III Member has any benefit which is defined
as an annuitization of accumulated member contributions.
* General Plan Design: From an administrative and design viewpoint,
the Actuary would suggest that consideration be given to incorporating
enhanced ODR and ADR benefit eligibilities and benefit formulas within
Retirement and Social Security Law ("RSSL") Article 14, using only Arti-
cle 14 terminology and structure to achieve the desired ODR and ADR
benefit eligibilities and benefit levels.
* Name: The official name of the Pension Fund is the New York Fire
Department Pension Fund.
* Presumptive Conditions for ADR
It is the understanding of the Actuary that the proposed legislation,
if enacted, would provide Tier III FIRE Members the ability to be eligi-
ble for and to utilize the presumptive conditions that qualify for ADR
that are available to Tier I and Tier II FIRE Members.
The reasoning behind this understanding is that in the proposed legis-
lation, eligibility conditions for Tier III FIRE members for ODR would
be determined pursuant to the Administrative Code of the City of New
York ("ACNY") Sections 13-316, 13-352 and 13-357 (i.e., those that apply
to Tier I and Tier II FIRE Members), notwithstanding anything to the
contrary.
Similarly, in the proposed legislation, eligibility conditions for
Tier III FIRE Members for ADR would be determined pursuant to the Admin-
istrative Code of the City of New York ("ACNY") Sections 13-316, 13-353
and 13-357 (i.e., those that apply to Tier I and Tier II FIRE Members),
notwithstanding anything to the contrary.
It is the understanding of the Actuary that in the proposed legis-
lation, eligibility for ODR and ADR would not be pursuant to RSSL
Section 507.e. RSSL Section 507.e provides that a member shall not be
eligible for ODR or ADR unless the member waives the benefits of any
statutory presumptions. Accordingly, it is the understanding of the
Actuary that since under the proposed legislation RSSL Section 507.e
would no longer apply to Tier III FIRE Members, Tier III FIRE Members
would not be required to waive RSSL Section 507.e in order to be eligi-
ble for ODR or ADR benefits. Consequently, the statutory presumptions
would apply since they have not been waived.
In accordance with the above reasoning, since current Tier III FIRE
Members are required to waive the presumptions pursuant to RSSL Section
507.e, it is the understanding of the Actuary that Tier III FIRE Members
are currently not entitled to presumptive conditions for ADR.
* Consistency Amongst Uniformed Groups
This proposed legislation would cover members of FIRE but not members
of the New York City Police Pension Fund ("POLICE") or any other
uniformed groups. Given the historical consistency in benefits amongst
certain uniformed groups, this proposed legislation would likely lead to
demands for similar legislation for at least some other uniformed
groups.
FISCAL NOTE: PROVISIONS OF PROPOSED LEGISLATION: This proposed legis-
lation would amend Retirement and Social Security Law ("RSSL") Sections
506, 507, 510, 511 and 512 and amend Administrative Code of the City of
New York ("ACNY") Section 13-357 to change, for members of the New York
Fire Department Pension Fund ("FIRE") subject to Article 14 of the RSSL,
the eligibility for and the calculation of Ordinary Disability Retire-
S. 5656 28
ment ("ODR") benefits and Accidental Disability Retirement ("ADR") bene-
fits.
The proposed legislation would also amend ACNY Section 13-353.1 and
General Municipal Law ("GML") Sections 207-k, 207-kk, 207-p and 207-q to
change the eligibility requirements for Medical Officers of FIRE to
utilize the statutory presumptions that qualify FIRE members for ADR.
Unless otherwise noted, for purposes of this Fiscal Note the term Tier
III FIRE members refers to members of the New York Fire Department
Pension Fund ("FIRE") who have a date of membership on or after July 1,
2009. Note: Although referred to herein as Tier III members, it should
be noted that members who join FIRE on or after April 1, 2012 are often
referred to as Tier VI members or Revised Tier III members. Also Note:
There is only one Tier III member of FIRE who has a date of membership
on or after July 1, 2009 and prior to April 1, 2012.
The Effective Date of the proposed legislation would be the 60th day
after the date of enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
ODR benefits for Tier III FIRE Members are based on:
* Completing five or more years of service, and
* Becoming eligible for Primary Social Security Disability retirement
benefits.
Such ODR benefits are equal to the greater of:
* 33 1/3% of Five-Year Final Average Salary ("FAS"), or
* 2% of FAS multiplied by years of credited service (not in excess of
22 years),
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
It is the understanding of the Actuary that FIRE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ODR
benefits for Tier III FIRE Members would be revised to be the same as
those provided in ACNY Sections 13-316, 13-352 and 13-357 (i.e., the
provisions applicable to Tier I and Tier II FIRE members).
In particular, completing five or more years of service would not be
required in order to be eligible for ODR benefits. In other words, there
would not any requirement for any minimum length of service to be
completed in order to be eligible for ODR benefits.
Under the proposed legislation, if enacted, the ODR benefit for Tier
III FIRE Members would be an allowance consisting of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* A pension, which together with the annuity, equal to 1/40 of One-
Year Final Average Salary ("FAS1") multiplied by years of credited
service, but not less than:
* * 1/2 of FAS1, if years of credited service are greater than or
equal to 10 years, or
* * 1/3 of FAS1, if years of credited service are less than 10 years.
Note: The proposed legislation also states that one component of the
ODR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ODR benefits for Tier III FIRE
S. 5656 29
Members. However, such ODR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provisions for
ADR benefits for Tier III FIRE Members are based on satisfying either:
* Being eligible for Social Security Disability retirement benefits
and having become disabled due to an accident sustained in the line of
duty, or
* Being physically or mentally incapacitated as a result of an acci-
dent sustained in the line of duty as determined by the appropriate
administrative authority assigned by FIRE.
As a consequence of RSSL Section 507.e, a Tier III FIRE Member would
not be eligible for ADR unless the member waived the benefits of any
statutory presumptions (e.g., certain heart diseases).
Such ADR benefits are calculated using a formula of 50% multiplied by
FAS less 50% of Primary Social Security disability benefit (determined
under RSSL Section 511) and less 100% of Workers' Compensation benefits
(if any).
Note: It is the understanding of the Actuary that FIRE Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ADR
benefits for Tier III FIRE Members would be revised to be the same as
those provided in ACNY Sections 13-316, 13-353 and 13-357 (i.e., the
provisions applicable to Tier I and Tier II FIRE Members).
In addition, it is the understanding of the Actuary that the proposed
legislation, if enacted, would provide that Tier III FIRE Members could
be eligible for and utilize the statutory presumptions (e.g., certain
heart diseases) that qualify certain Tier I and Tier II FIRE Members for
ADR.
The current eligibility to utilize the statutory presumptions requires
that the member must have successfully passed a physical examination for
entry into public service which failed to disclose evidence of the qual-
ifying condition or impairment of health that formed the basis for the
disability.
Under the proposed legislation, Medical Officers may satisfy the
eligibility to utilize the statutory presumptions provided the Medical
Officer authorized release of all relevant medical records, and there is
no evidence of the qualifying condition or impairment that formed the
basis for the disability in such medical records unless the contrary is
proved by competent evidence.
Under the proposed legislation, if enacted, the ADR benefit for Tier
III FIRE Members would be revised to equal a retirement allowance equal
to the sum of:
* An actuarial equivalent annuity of accumulated member contributions,
plus
* 75% multiplied by FAS1.
Note: The proposed legislation also states that one component of the
ADR benefit would be the actuarial equivalent annuity of an Increased-
Take-Home-Pay ("ITHP") reserve. This theoretical benefit is not included
in this Fiscal Note analysis since it is the understanding of the Actu-
ary that ITHP is not available to Tier III members generally and is not
specifically defined in the proposed legislation.
Also note, it is the understanding of the Actuary that the Tier III
FIRE Members impacted by the proposed legislation would not receive any
additional 1/60 of annual earnings after 20 years of service.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ADR benefits for Tier III FIRE
S. 5656 30
Members. However, such ADR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES:
Based on the census data and the actuarial assumptions and methods noted
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value ("APV") of benefits ("APVB"),
APV of member contributions, the Unfunded Acturial Accrued Liability
("UAAL") and APV of future employer costs as of June 30, 2013 for Tier
III FIRE Members.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER COSTS
AND PROJECTED EMPLOYER COSTS: For purposes of this Fiscal Note, it is
assumed that the changes in APVB, APV of future member contributions,
UAAL and APV of future employer costs would be reflected for the first
time in the June 30, 2013 actuarial valuation of FIRE.
Under the One-Year Lag Methodology ("OYLM"), the first year that
changes in benefits for Tier III FIRE Members could impact employer
costs to FIRE would be Fiscal Year 2015.
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, 2013, the remaining working lifetime of
the Tier III FIRE Members is approximately 24 years. Recognizing that
this period will decrease over time as the group of Tier III Members
matures, the Actuary would likely choose to amortize the new UAAL
attributable to this proposed legislation over a 15-year to 20-year
period (between 14 and 19 payments under the OYLM Methodology). However,
since virtually all of the Tier III FIRE members that would be impacted
by the benefit changes are new entrants, the resulting UAAL would be de
minimis and therefore the amortization period used for the UAAL has very
little impact on the final results.
The following Table 1 presents an estimate of the increases due to the
changes in ODR and ADR provisions for Tier III FIRE Members and the
changes in eligibility requirements for presumptions for FIRE Medical
Officers in the APV of future employer costs and in employer costs to
FIRE for Fiscal Years 2015 through 2019 that would occur based on the
applicable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on FIRE
If Certain Revisions are Made to
Provisions for ODR and ADR Benefits
for Tier III FIRE Members and to Presumption
Eligibility Requirements for Medical Officers *
($ Millions)
Increase in APV of Increase in Employer
Fiscal Year Future Employer Costs Costs
2015 $16.3 $2.1
2016 68.3 8.2
2017 120.1 13.5
2018 173.1 18.4
2019 227.3 23.1
S. 5656 31
* Based on actuarial assumptions and methods set forth in the Actuarial
Assumptions and Method section. Also, based on the projection assumptions
as described herein.
ODR and ADR benefits are NOT subject to Tier III Escalation (RSSL
Section 510).
The estimated increases in employer costs shown in Table 1 are based
upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget
("NYCOMB") for use in the January 2015 Financial Plan ("Updated Prelimi-
nary Projections").
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
As of each future actuarial valuation date, the current "closed group"
actuarial assumptions and valuation methodology are used.
Under this methodology only Plan participants as of each actuarial
valuation date are utilized to determine APVs employer costs and employ-
er contributions.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: Since the assump-
tions used in the actuarial valuation of FIRE do not distinguish between
Medical Officers and other FIRE members and those assumptions for Tier
II members already incorporate some or all of the presumptions available
under law, the increase in employer contributions and in the APV of
future employer contributions would be slightly less than those shown in
Table 1.
FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
Normal Costs can provide a useful basis to compare the value of alterna-
tive benefit programs.
For each member who enters FIRE, there is a theoretical net annual
employer cost to be paid for such member while such member remains
actively employed (i.e., the Employer Entry Age Normal Cost ("EEANC")).
In addition, such EEANC may be expressed as a percentage of salary
earned over a working lifetime and referred to as the Employer Entry Age
Normal Rate ("EEANR").
Under the proposed legislation and based on the actuarial assumptions
noted herein, the EEANC and EEANR of Tier III FIRE Members would be
greater than the EEANC and EEANR for comparable Tier III FIRE Members
entering at the same attained age and gender under the current FIRE
provisions.
Table 2 shows a summary of the change in EEANR for Tier III FIRE
Members who have a date of membership on or after April 1, 2012 for
entry ages 25, 30 and 35 with a starting salary of $45,000, determined
as of the most recent date of published EEANR calculations:
Table 2
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012*
To Implement Certain ODR and ADR Provisions for
Tier III FIRE Members with a Membership Date on or After April 1, 2012
S. 5656 32
Under Proposed Legislation
and
Under Current Law
EEANR Under Proposed Legislation**
Entry Age 25 Entry Age 30 Entry Age 35
Retirement
System Male Female Male Female Male Female
FIRE 21.92% 22.50% 27.31% 28.01% 34.55% 35.31%
EEANR Under Current Law
FIRE 15.94% 16.51% 18.99% 19.68% 21.78% 22.51%
Increase in EEANR Due to Proposed Legislation
FIRE 5.98% 5.99% 8.32% 8.33% 12.77% 12.80%
* Based on salaries paid over entire working lifetime. EEANR do not var
significantly over time, absent benefit and/or actuarial assumption
changes.
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted herein
including changes in assumptions for ADR. ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510).
OTHER COSTS: 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.
* The potential impact if this proposed legislation were to be
extended to other public safety employees.
* The impact of this proposed legislation on Other Postemployment
Benefit ("OPEB") costs.
CENSUS DATA: The starting census data used for the calculations
presented herein are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of FIRE used to determine the
Updated Preliminary Fiscal Year 2015 employer contributions.
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of FIRE.
The 169 Tier III FIRE Members as of June 30, 2013 (including the one
Tier III member who has a date of membership prior to April 1, 2012) had
an average age of approximately 27, average service of approximately 0.5
years and an average salary of approximately $48,200.
There were 21 Medical Officers in FIRE as of June 30, 2013. Of the 21,
7 are currently eligible to utilize the statutory presumptions. In addi-
tion, 7 of the 14 Medical Officers who are not currently eligible to
utilize the statutory presumptions became members after September 11,
2001 and, therefore, are unlikely to be eligible for World Trade Center
presumptive benefits but, if the proposed legislation is enacted, could
become eligible for other presumptive benefits.
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 June 30, 2013 (Lag) actuarial
S. 5656 33
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of FIRE and adjusted for revised ADR eligibility
provisions.
The probabilities of accidental disability used for Tier III FIRE
Members in the event statutory presumptions were to apply equal those
currently used for Tier I and Tier II FIRE 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 FIRE Members are not covered by such
benefits.
To the extent that the enactment of this proposed legislation would
cause a greater (lesser) number of Tier III FIRE Members to be reclassi-
fied from Ordinary Disability to Accidental Disability Retirement, or to
the extent that Tier III FIRE Members who would not otherwise ever
choose to apply and then receive an Ordinary Disability Retirement bene-
fit or an Accidental Disability Retirement benefit, then the additional
APVB and employer contributions shown herein would be greater (lesser).
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 into Tier III FIRE Members were projected to replace the
FIRE members expected to leave the active population to maintain a
steady-state population.
The following Table 3 presents the total number of active employees of
FIRE used in the projections, assuming a level work force, and the cumu-
lative number (i.e., net of withdrawals) of Tier III Members as of each
June 30 from 2013 through 2017.
Table 3
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier III FIRE Members from 2013
Used in the Projections*
June 30 Tier I&II Tier III Total
2013 10,013 169 10,182
2014 9,486 696 10,182
2015 8,988 1,194 10,182
2016 8,509 1,673 10,182
2017 8,055 2,127 10,182
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
Assumes presumptions apply to Tier III FIRE members.
For purposes of estimating the impact of the Tier III Escalation for
retired Tier III FIRE Members, consistent with an underlying Consumer
Price Inflation ("CPI") assumption of 2.5% per year, Tier III Escalation
of 2.5% per year has been assumed.
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.
S. 5656 34
For Variable Supplements Fund ("VSF") benefits, it has been assumed
that retroactive lump sum payments of VSF ("DROP payments") would be
payable from the completion of 20 years of service.
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 FIRE.
However, the economic assumptions (current and proposed) 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 Acting
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 Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-07, dated
February 27, 2015 prepared by the Acting Chief Actuary of the New York
Fire Department Pension Fund.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
Background - Design of Proposed Legislation
In general, the OA believes that proposed legislation should:
* Be technically accurate,
* Be clear in its intent,
* Be administrable, and
* Meet desired policy objectives.
While the OA cannot provide any legal analysis, the OA has done a
review of the proposed legislation and has some concerns. These concerns
that follow represent the best understanding of the Actuary and staff of
the OA and should not be considered legal interpretations. All of these
concerns and suggestions should be reviewed by Counsel.
Concerns with Proposed Legislation with Respect to Ordinary Disability
Retirement ("ODR") and Accidental Disability Retirement ("ADR")
* Benefits Compared to Tier III: The proposed legislation, if enacted,
would revise the ODR and ADR benefit formulas for Tier VI Correction
Members.
It appears that the proposed Tier VI ODR benefit formula is intended
to be the same as the ODR benefit available to Tier III Correction
Members after completing 10 years of service (i.e., 1 2/3% of Three-Year
Final Average Salary ("FAS3") multiplied by the years of service, but
not less than one-third of FAS3).
Similarly, it also appears that the proposed ADR benefit formula for
Tier VI Correction Members is intended to be the same as the ADR benefit
available to Tier III Correction Members (i.e., 75% of FAS3 but not less
than 1 2/3% of FAS3 multiplied by years of credited service).
Correction Tier III ODR and ADR benefits are subject to Cost-of-Living
Adjustments ("COLA") under Chapter 125 of the Laws of 2000 on the first
$18,000 of benefit after five years of Disability Retirement.
Given the proposed statutory references, it is the understanding of
the Actuary that the proposed ODR and ADR benefits for Tier VI
Correction Members would be entitled to the COLA described in the
preceding paragraph, but would NOT be subject to an annual Tier VI Esca-
lation increase on the full benefit immediately from the date of Disa-
bility Retirement.
S. 5656 35
* Presumptive Conditions for ADR
It is the understanding of the Actuary that the proposed legislation,
if enacted, would provide Tier VI Correction Members the ability to be
eligible for and to utilize the presumptive conditions that qualify for
ADR that are available to Tier III Correction Members.
The reasoning behind this understanding is that in the proposed legis-
lation, eligibility conditions for Tier VI Correction members for the
ODR would be determined pursuant to the Administrative Code of the City
of New York ("ACNY") Section 13-167 (i.e., those that apply to Tier III
Correction Members), notwithstanding anything to the contrary.
Similarly, in the proposed legislation, eligibility conditions for
Tier VI Correction Members for ADR would be determined pursuant to the
Administrative Code of the City of New York ("ACNY") Section 13-168
(i.e., those that apply to Tier III Correction Members), notwithstanding
anything to the contrary.
It is the understanding of the Actuary that in the proposed legis-
lation, eligibility for ODR and ADR would not be pursuant to RSSL
Section 507.e. RSSL Section 507.e provides that a member shall not be
eligible for ODR or ADR unless the member waives the benefits of any
statutory presumptions. Accordingly, it is the understanding of the
Actuary that since under the proposed legislation RSSL Section 507.e
would no longer apply to Tier VI Correction Members, Tier VI Correction
Members would not be required to waive RSSL Section 507.e in order to be
eligible for ODR or ADR benefits. Consequently, the statutory presump-
tions would apply since they have not been waived.
In accordance with the above reasoning, since current Tier VI
Correction Members are required to waive the presumptions pursuant to
RSSL Section 507.e, it is the understanding of the Actuary that Tier VI
Correction Members are currently not entitled to presumptive conditions
for ADR.
* Consistency Amongst Uniformed Groups
This proposed legislation would cover member of Correction but not
members of any other uniformed groups. Given the historical consistency
in benefits amongst certain uniformed groups, this proposed legislation
would likely lead to demands for similar legislation for at least some
other uniformed groups.
FISCAL NOTE. PROVISIONS OF PROPOSED LEGISLATION: This proposed legis-
lation would amend Retirement and Social Security Law ("RSSL") Sections
506, 507, 510, 511 and 512 and Administrative Code of the City of New
York ("ACNY") Section 13-171 to change, for Tier VI Correction members
of the New York City Employees' Retirement System ("NYCERS") subject to
Article 14 of the RSSL as amended by Chapter 18 of the Laws of 2012
("Tier VI members"), the eligibility for and the calculation of Ordinary
Disability Retirement ("ODR") benefits and Accidental Disability Retire-
ment ("ADR") benefits.
The Effective Date of the proposed legislation would be the 60th day
after the date of enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
ODR benefits for Tier VI Correction Members are based on:
* Completing five or more years of service, and
* Becoming eligible for Primary Social Security Disability retirement
benefits.
Such current Tier VI ODR benefits are equal to the greater of:
* 33 1/3% of Five-Year Final Average Salary ("FAS5"), or
* 2% of FAS5 multiplied by years of credited service (not in excess of
22 years),
S. 5656 36
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
* Reduced by 100% of Workers' Compensation benefits (if any).
Under the proposed legislation the eligibility requirements for ODR
benefits for Tier VI Correction Members would be revised to be the same
as those provided in ACNY Section 13-167 (i.e., the provisions applica-
ble to Tier III Correction members) and would be based on completing ten
or more years of service.
Such Tier III ODR benefits are equal to the greater of:
* 33 1/3% of Three-Year Final Average Salary ("FAS3"), or
* 1 2/3% of FAS3 multiplied by years of credited service.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ODR benefits for Tier VI Correction
Members. However, such ODR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the laws of 2000.
Note: As a result of Constitutional Protection under Article V,
Section 7 of the New York State Constitution, it is the understanding of
the Actuary that all Tier VI Sanitation members who are NYCERS members
prior to the effective date of this proposed legislation would continue
to be eligible for the current Tier VI ODR provisions, and this has been
assumed for purposes of determining obligations under this proposed
legislation.
IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provision for
ADR benefits for Tier VI Correction Members is based on:
* Being physically or mentally incapacitated as a result of an acci-
dent sustained in the line of duty as determined by the administrative
authority assigned by NYCERS.
Such ADR benefits are equal to:
* 50% multiplied by FAS5,
* Less 50% of Primary Social Security disability benefit or Primary
Social Security benefits, whichever begins first (determined under RSSL
Section 511),
* Less 100% of Workers' Compensation benefits (if any).
Under the proposed legislation the eligibility requirements for ADR
benefits for Tier VI Correction Members would be revised to be the same
as those provided in ACNY Section 13-168 (i.e., the provisions applica-
ble to Tier III Correction Members).
In addition, it is the understanding of the Actuary that the proposed
legislation, if enacted, would provide that Tier VI Correction Members
could be eligible for and utilize the statutory presumptions (e.g.,
certain heart diseases) that qualify certain Tier III Correction Members
for ADR and Accidental Death Benefits.
As a consequence of RSSL Section 507.e, a Tier VI Correction Member
would not be eligible for ADR unless the member waived the benefits of
any statutory presumptions (e.g., certain heart diseases).
Under the proposed legislation, if enacted, the ADR benefit for Tier
VI Correction Members would be revised to equal a retirement allowance
equal to:
* 75% multiplied by FAS3,
* Less 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 VI Correction
Members. However, such ADR benefits would still be eligible for COLA
under Chapter 125 of the Laws of 2000.
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES:
Based on the census data and the actuarial assumptions and methods noted
S. 5656 37
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value ("APV") of benefits ("APVB"),
APV of member contributions, the Unfunded Actuarial Accrued Liability
("UAAL") and APV of future employer contributions as of June 30, 2013
for Tier VI Correction Members.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
Fiscal Note, it is assumed that the changes in APVB, APV of member
contributions, UAAL and APV of future employer contributions would be
reflected for the first time in the June 30, 2013 actuarial valuation of
NYCERS.
Under the One-Year Lag Methodology ("OYLM"), the first year that
changes in benefits for Tier VI Correction Members could impact employer
contributions to NYCERS would be Fiscal Year 2015.
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, 2013, the remaining working lifetime of
the Tier VI Correction Members is approximately 20 years. Recognizing
that this period will decrease over time as the group of Tier VI Members
matures, the Actuary would likely choose to amortize the new UAAL
attributable to this proposed legislation over a 15-year to 20-year
period (between 14 and 19 payments under the OYLM Methodology). However,
since virtually all of the Tier VI Correction members that would be
impacted by the benefit changes are new entrants, the resulting UAAL
would be de minimis and therefore the amortization period used for the
UAAL has very little impact on the final results.
The following Table 1 presents an estimate of the increases due to the
changes in ODR and ADR provisions for Tier VI Correction Members in the
APV of future employer contributions and in employer contributions to
NYCERS for Fiscal Years 2015 through 2019 that would occur based on the
applicable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on NYCERS
If Certain Revisions are Made to
Provisions for ODR and ADR Benefits
for Tier VI Correction Members *
($ Millions)
Increase in APV of Increase in Employer
Fiscal Year Future Employer Contributions Contributions
2015 $6.8 $0.8
2016 11.3 1.3
2017 15.0 1.6
2018 18.3 1.9
2019 22.0 2.2
* Based on actuarial assumptions and methods set forth in the Actuari-
al Assumptions and Methods section. Also, based on the projection
assumptions as described herein.
ODR and ADR benefits are NOT subject to Tier III Escalation (RSSL
Section 510) but would be eligible for COLA under Chapter 125 of the
Laws of 2000.
S. 5656 38
The estimated increases in employer contributions shown in Table 1 are
based upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget
("NYCOMB") for use in the January 2015 Financial Plan ("Updated Prelimi-
nary Projections").
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
As of each future actuarial valuation date, the current "closed group"
actuarial assumptions and valuation methodology are used.
Under this methodology only Plan participants as of each actuarial
valuation date are utilized to determine APVs, employer costs and
employer contributions.
FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
Normal Costs can provide a useful basis to compare the value of alterna-
tive benefit programs.
For each Correction member who enters NYCERS, there is a theoretical
net annual employer cost to be paid for such member while such member
remains actively employed (i.e., the Employer Entry Age Normal Cost
("EEANC")).
In addition, such EEANC may be expressed as a percentage of salary
earned over a working lifetime and referred to as the Employer Entry Age
Normal Rate ("EEANR").
Under the proposed legislation and based on the actuarial assumptions
noted herein, the EEANC and EEANR of Tier VI Correction Members would be
greater than the EEANC and EEANR for comparable Tier VI Correction
Members entering at the same attained age and gender under the current
NYCERS provisions.
Table 2 shows a summary of the change in EEANR for Tier VI Correction
Members who have a date of membership on or after the date of enactment
of this proposed legislation for entry ages 25, 30 and 35 determined as
of June 30, 2012 with a starting salary of $45,000, determined as of the
most recent date of published EEANR calculations:
Table 2
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012 Excluding One-Year Lag Methodology*
To Implement Certain ODR and ADR and Accidental Death Benefit Provisions
for Tier VI Correction Members
Under Proposed Changes with Presumptions
and
Under Current Law
EEANR Under Proposed Changes**
Entry Age 25 Entry Age 30 Entry Age 35
Male Female Male Female Male Female
Correction Tier VI 17.80% 18.42% 16.29% 16.90% 15.11% 15.76%
S. 5656 39
EEANR Under Current Law
Correction Tier VI 17.34% 17.97% 15.79% 16.42% 14.56% 15.24%
Increase in EEANR Due to Proposed Changes
Correction Tier VI 0.46% 0.45% 0.50% 0.48% 0.55% 0.52%
* Based on salaries paid over entire working lifetime. EEANR do not vary
significantly over time, absent benefit and/or actuarial assumption
changes.
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted here-
in including changes in assumptions for ADR. ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510) but would be
eligible for COLA under Chapter 125 of the Laws of 2000.
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of NYCERS 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.
* The impact of this proposed legislation on Other Postemployment
Benefit ("OPEB") costs.
CENSUS DATA: The starting census data used for the calculations
presented herein are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of NYCERS used to determine the
Updated Preliminary Fiscal Year 2015 employer contributions.
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of NYCERS.
The 877 Tier VI Correction Members as of June 30, 2013 had an average
age of approximately 32, average service of approximately 0.5 years and
an average salary of approximately $46,000.
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 June 30, 2013 (Lag) actuarial
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of NYCERS and adjusted for revised ADR and Acci-
dental Death eligibility provisions.
For determining the change in APVB and increase in employer costs to
NYCERS, the actuarial assumptions and methods are the same as those used
in the June 30, 2013 (Lag) actuarial valuation of NYCERS except that
probabilities of Ordinary Disability and Ordinary Death have been
reduced by 5% and 10%, respectively, and the probabilities of Accidental
Disability and Accidental Death have been increased by the same amounts
of reduction in the probabilities of Ordinary Disability and Ordinary
Death, respectively.
Neither this Fiscal Note nor the actuarial valuation methodology used
to determine employer contributions to NYCERS reflect a calculation of
the value of an offset for Workers' Compensation benefits.
ADR benefits under both the current provisions and proposed legis-
lation are offset by Workers' Compensation benefits and, therefore, any
Workers' Compensation benefits paid would not impact the costs shown.
S. 5656 40
On the other hand, to the extent members who receive ODR benefits also
receive Workers' Compensation benefits, those Workers' Compensation
benefits received reduce the amounts otherwise payable under current
provisions of law but would not impact the benefits payable under the
proposed legislation.
Thus, the lack of an offset for the value of Workers' Compensation
benefits understates the costs presented in this Fiscal Note but the
Actuary believes this understatement is modest.
The amounts shown in this Fiscal Note equal the impact on employer
contributions were the proposed legislation to be enacted.
To the extent that the enactment of this proposed legislation would
cause a greater (lesser) number of Tier VI Correction Members to be
reclassified from Ordinary Disability to Accidental Disability Retire-
ment or from Ordinary Death to Accidental Death, or to the extent that
Tier VI Correction Members who would not otherwise ever choose to apply
and then receive an Ordinary Disability Retirement benefit or an Acci-
dental Disability Retirement benefit, then the additional APVB and
employer contributions shown herein would be greater (lesser).
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 entrant Tier VI Correction Members were projected to replace the
Correction members expected to leave the active population to maintain a
steady-state population.
The following Table 3 presents the total number of active employees of
Correction used in the projections, assuming a level work force, and the
cumulative number (i.e., net of withdrawals) of Tier VI Members as of
each June 30 from 2013 through 2017.
Table 3
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier VI Correction Members from 2013
Used in the Projections*
June 30 Tier I, II, III & IV Tier VI Total
2013 7,798 877 8,675
2014 7,278 1,397 8,675
2015 6,865 1,810 8,675
2016 6,414 2,261 8,675
2017 5,919 2,756 8,675
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
Assumes presumptions apply to Tier VI Correction members.
For purposes of estimating the impact of the Tier VI Escalation for
retired Tier VI Correction Members, consistent with an underlying
Consumer Price Inflation ("CPI") assumption of 2.5% per year, Tier VI
Escalation of 2.5% per year has been assumed.
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.
S. 5656 41
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 NYCERS.
However, the economic assumptions (current and proposed) 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 Acting
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 Actuar-
ies. I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
FISCAL NOTE IDENTIFICATION: This estimate is intended for use only
during the 2015 Legislative Session. It is Fiscal Note 2015-20, dated
April 9, 2015 prepared by the Acting Chief Actuary of the New York City
Employees' Retirement System.
FISCAL NOTE. -- Pursuant to Legislative Law, Section 50:
BACKGROUND - DESIGN OF PROPOSED LEGISLATION
In general, the OA believes that proposed legislation should:
* Be technically accurate,
* Be clear in its intent,
* Be administrable, and
* Meet desired policy objectives.
While the OA cannot provide any legal analysis, the OA has done a
review of the proposed legislation and has some concerns. These concerns
that follow represent the best understanding of the Actuary and staff of
the OA and should not be considered legal interpretations. All of these
concerns and suggestions should be reviewed by Counsel.
CONCERNS WITH PROPOSED LEGISLATION WITH RESPECT TO ORDINARY DISABILITY
RETIREMENT ("ODR") AND ACCIDENTAL DISABILITY RETIREMENT ("ADR")
* Benefits Compared to Tier IV: The proposed legislation, if enacted,
would revise the ODR and ADR benefit formulas for Tier VI Sanitation
Members.
It appears that the proposed Tier VI ODR benefit formula is intended
to be the same as the ODR benefit available to Tier IV Sanitation
Members (i.e., 1 2/3% of Three-Year Final Average Salary ("FAS3") multi-
plied by the years of service, but not less than one-third of FAS3).
Similarly, it also appears that the proposed ADR benefit formula for
Tier VI Sanitation Members is intended to be the same as the ADR benefit
available to Tier IV Sanitation Members (i.e., 75% of FAS3 but not less
than 1 2/3% of FAS3 multiplied by years of credited service).
Sanitation Tier IV ODR and ADR benefits are subject to Cost-of-Living
Adjustments ("COLA") under Chapter 125 of the Laws of 2000 on the first
$18,000 of benefit after five years of Disability Retirement.
Given the proposed statutory references, it is the understanding of
the Actuary that the proposed ODR and ADR benefits for Tier VI Sanita-
tion Members would be entitled to the COLA described in the preceding
paragraph, but would NOT be subject to an annual Tier VI Escalation
increase on the full benefit immediately from the date of Disability
Retirement.
* Presumptive Conditions for ADR
It is the understanding of the Actuary that the proposed legislation,
if enacted, would provide Tier VI Sanitation Members the ability to be
S. 5656 42
eligible for and to utilize the presumptive conditions that qualify for
ADR that are available to Tier IV Sanitation Members.
The reasoning behind this understanding is that in the proposed legis-
lation, eligibility conditions for Tier VI Sanitation members for ODR
would be determined pursuant to the Administrative Code of the City of
New York ("ACNY") Section 13-167 (i.e., those that apply to Tier IV
Sanitation Members), notwithstanding anything to the contrary.
Similarly, in the proposed legislation, eligibility conditions for
Tier VI Sanitation Members for ADR would be determined pursuant to the
Administrative Code of the City of New York ("ACNY") Section 13-168
(i.e., those that apply to Tier IV Sanitation Members), notwithstanding
anything to the contrary.
It is the understanding of the Actuary that in the proposed legis-
lation, eligibility for ODR and ADR would not be pursuant to RSSL
Section 507.e. RSSL Section 507.e provides that a member shall not be
eligible for ODR or ADR unless the member waives the benefits of any
statutory presumptions. Accordingly, it is the understanding of the
Actuary that since under the proposed legislation RSSL Section 507.e
would no longer apply to Tier VI Sanitation Members, Tier VI Sanitation
Members would not be required to waive RSSL Section 507.e in order to be
eligible for ODR and ADR benefits. Consequently, the statutory presump-
tions would apply since they have not been waived.
In accordance with the above reasoning, since current Tier VI Sanita-
tion Members are required to waive the presumptions pursuant to RSSL
Section 507.e, it is the understanding of the Actuary that Tier VI Sani-
tation Members are currently not entitled to presumptive conditions for
ADR.
* Consistency Amongst Uniformed Groups
This proposed legislation would cover members of Sanitation but not
members of any other uniformed groups. Given the historical consistency
in benefits amongst certain uniformed groups, this proposed legislation
would likely lead to demands for similar legislation for at least some
other uniformed groups.
FISCAL NOTE:
PROVISIONS OF PROPOSED LEGISLATION: This proposed legislation would
amend Retirement and Social Security Law ("RSSL") Sections 506, 507,
510, 511 and 512 and Administrative Code of the City of New York
("ACNY") Section 13-171 to change, for Tier VI Sanitation members of the
New York City Employees' Retirement System ("NYCERS") subject to Article
14 of the RSSL as amended by Chapter 18 of the Laws of 2012 ("Tier VI
members"), the eligibility for and the calculation of Ordinary Disabili-
ty Retirement ("ODR") benefits and Accidental Disability Retirement
("ADR") benefits.
The Effective Date of the proposed legislation would be the 60th day
after the date of enactment.
IMPACT ON ODR BENEFITS PAYABLE: The current eligibility provisions for
ODR benefits for Tier VI Sanitation Members are based on:
* Completing five or more years of service, and
* Becoming eligible for Primary Social Security Disability retirement
benefits.
Such current Tier VI ODR benefits are equal to the greater of:
* 33 1/3% of Five-Year Final Average Salary ("FAS5"), or
* 2% of FAS5 multiplied by years of credited service (not in excess of
22 years),
* Reduced by 50% of the Primary Social Security Disability benefits
(determined under RSSL Section 511), and
S. 5656 43
* Reduced by 100% of Workers' Compensation benefits (if any).
It is the understanding of the Actuary that Sanitation Members are not
covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ODR
benefits for Tier VI Sanitation Members would be revised to be the same
as those provided in ACNY Section 13-167 (i.e., the provisions applica-
ble to Tier IV Sanitation members) and would be based on completing ten
or more years of service.
Such Tier IV ODR benefits are equal to the greater of:
* 33 1/3% of Three-Year Final Average Salary ("FAS3"), or
* 1 2/3% of FAS31 multiplied by years of credited service.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ODR benefits for Tier VI Sanitation
Members. However, such ODR benefits would still be eligible for Cost-of-
Living Adjustments ("COLA") under Chapter 125 of the Laws of 2000.
Note: As a result of Constitutional Protection under Article V,
Section 7 of the New York State Constitution, it is the understanding of
the Actuary that all Tier VI Sanitation members who are NYCERS members
prior to the effective date of this proposed legislation would continue
to be eligible for the current Tier VI ODR provisions, and this has been
assumed for purposes of determining obligations under this proposed
legislation.
IMPACT ON ADR BENEFITS PAYABLE: The current eligibility provision for
ADR benefits for Tier VI Sanitation Members is based on:
* Being physically or mentally incapacitated as a result of an acci-
dent sustained in the line of duty as determined by the administrative
authority assigned by NYCERS.
Such ADR benefits are equal to:
* 50% multiplied by FAS5,
* Less 50% of Primary Social Security disability benefit or Primary
Social Security benefits, whichever begins first (determined under RSSL
Section 511),
* Less 100% of Workers' Compensation benefits (if any).
Note: It is the understanding of the Actuary that Sanitation Members
are not covered by Workers' Compensation.
Under the proposed legislation the eligibility requirements for ADR
benefits for Tier VI Sanitation Members would be revised to be the same
as those provided in ACNY Section 13-168 (i.e., the provisions applica-
ble to Tier IV Sanitation Members).
In addition, it is the understanding of the Actuary that the proposed
legislation, if enacted, would provide that Tier VI Sanitation Members
could be eligible for and utilize the statutory presumptions (e.g.,
certain heart diseases) that qualify certain Tier IV Sanitation Members
for ADR and Accidental Death Benefits.
As a consequence of RSSL Section 507.e, a Tier VI Sanitation Member
would not be eligible for ADR unless the member waived the benefits of
any statutory presumptions (e.g., certain heart diseases).
Under the proposed legislation, if enacted, the ADR benefit for Tier
VI Sanitation Members would be revised to equal a retirement allowance
equal to:
* 75% multiplied by FAS3.
In addition, the proposed legislation would NOT apply the Escalation
available under RSSL Section 510 to ADR benefits for Tier VI Sanitation
Members. However, such ADR benefits would still be eligible for COLA
under Chapter 125 of the Laws of 2000.
S. 5656 44
FINANCIAL IMPACT - CHANGES IN BENEFITS - ACTUARIAL PRESENT VALUES:
Based on the census data and the actuarial assumptions and methods noted
herein, if the Effective Date is on or before June 30, 2015, then this
would change the Actuarial Present Value ("APV") of benefits ("APVB"),
APV of member contributions, the Unfunded Actuarial Accrued Liability
("UAAL") and APV of future employer contributions as of June 30, 2013
for Tier VI Sanitation Members.
FINANCIAL IMPACT - CHANGES IN PROJECTED APV OF FUTURE EMPLOYER
CONTRIBUTIONS AND PROJECTED EMPLOYER CONTRIBUTIONS: For purposes of this
Fiscal Note, it is assumed that the changes in APVB, APV of member
contributions, UAAL and APV of future employer contributions would be
reflected for the first time in the June 30, 2013 actuarial valuation of
NYCERS.
Under the One-Year Lag Methodology ("OYLM"), the first year that
changes in benefits for Tier VI Sanitation Members could impact employer
contributions to NYCERS would be Fiscal Year 2015.
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, 2013, the remaining working lifetime of
the Tier VI Sanitation Members is approximately 21 years. Recognizing
that this period will decrease over time as the group of Tier VI Members
matures, the Actuary would likely choose to amortize the new UAAL
attributable to this proposed legislation over a 15-year to 20-year
period (between 14 and 19 payments under the OYLM Methodology). However,
since virtually all of the Tier VI Sanitation members that would be
impacted by the benefit changes are new entrants, the resulting UAAL
would be de minimis and therefore the amortization period used for the
UAAL has very little impact on the final results.
The following Table 1 presents an estimate of the increases due to the
changes in ODR and ADR provisions for Tier VI Sanitation Members in the
APV of future employer contributions and in employer contributions to
NYCERS for Fiscal Years 2015 through 2019 that would occur based on the
applicable actuarial assumptions and methods noted herein:
Table 1
Estimated Financial Impact on NYCERS
If Certain Revisions are Made to
Provisions for ODR and ADR Benefits
for Tier VI Sanitation Members *
($ Millions)
Fiscal Year Increase in APV Increase in Employer
of Future Contributions
Employer
Contributions
2015 $4.2 $0.5
2016 8.8 1.0
2017 12.0 1.3
2018 14.9 1.6
2019 17.1 1.7
S. 5656 45
* Based on actuarial assumptions and methods set forth in the Actuari-
al Assumptions and Method section. Also, based on the projection assump-
tions as described herein.
ODR and ADR benefits are NOT subject to Tier III Escalation (RSSL
Section 510) but would be eligible for COLA under Chapter 125 of the
Laws of 2000.
The estimated increases in employer contributions shown in Table 1 are
based upon the following projection assumptions:
* Level workforce (i.e., new employees are hired to replace those who
leave active status).
* Projected salary increases consistent with those used in projections
presented to the New York City Office of Management and Budget
("NYCOMB") for use in the January 2015 Financial Plan ("Updated Prelimi-
nary Projections").
* New entrant salaries consistent with those used in the Updated
Preliminary Projections.
These "open group" projections include future new entrants introduced
into the census data models to project the future workforces.
As of each future actuarial valuation date, the current "closed group"
actuarial assumptions and valuation methodology are used.
Under this methodology only Plan participants as of each actuarial
valuation date are utilized to determine APVs, employer costs and
employer contributions.
FINANCIAL IMPACT - EMPLOYER ENTRY AGE NORMAL COSTS: Employer Entry Age
Normal Costs can provide a useful basis to compare the value of alterna-
tive benefit programs.
For each Sanitation member who enters NYCERS, there is a theoretical
net annual employer cost to be paid for such member while such member
remains actively employed (i.e., the Employer Entry Age Normal Cost
("EEANC")).
In addition, such EEANC may be expressed as a percentage of salary
earned over a working lifetime and referred to as the Employer Entry Age
Normal Rate ("EEANR").
Under the proposed legislation and based on the actuarial assumptions
noted herein, the EEANC and EEANR of Tier VI Sanitation Members would be
greater than the EEANC and EEANR for comparable Tier VI Sanitation
Members entering at the same attained age and gender under the current
NYCERS provisions.
Table 2 shows a summary of the change in EEANR for Tier VI Sanitation
Members who have a date of membership on or after the date of enactment
of this proposed legislation for entry ages 25, 30 and 35 with a start-
ing salary of $45,000, determined as of the most recent date of
published EEANR calculations:
Table 2
Comparison of Employer Entry Age Normal Rates
Determined as of June 30, 2012 Excluding One-Year Lag Methodology*
To Implement Certain ODR and ADR and Accidental Death Benefit Provisions
for Tier VI Sanitation Members
Under Proposed Changes with Presumptions
and
Under Current Law
EEANR Under Proposed Changes**
S. 5656 46
Entry Age 25 Entry Age 30 Entry Age 35
Male Female Male Female Male Female
Sanitation 16.85% 17.45% 15.45% 16.05% 14.43% 15.08%
Tier VI
EEANR Under Current Law
Sanitation 16.46% 17.08% 14.98% 15.59% 13.84% 14.50%
Tier VI
Increase in EEANR Due to Proposed Changes
Sanitation 0.39% 0.37% 0.47% 0.46% 0.59% 0.58%
Tier VI
* Based on salaries paid over entire working lifetime. EEANR do not
vary significantly over time, absent benefit and/or actuarial assumption
changes.
** EEANR determined under the terms of the revised ODR and ADR benefit
provisions based on the Actuarial Assumptions and Methods as noted here-
in including changes in assumptions for ADR. ODR and ADR benefits are
NOT subject to Tier III Escalation (RSSL Section 510) but would be
eligible for COLA under Chapter 125 of the Laws of 2000.
OTHER COSTS: Not measured in this Fiscal Note are the following:
* The initial, additional administrative costs of NYCERS 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.
* The impact of this proposed legislation on Other Post Employment
Benefit ("OPEB") costs.
CENSUS DATA: The starting census data used for the calculations
presented herein are the census data used in the Updated Preliminary
June 30, 2013 (Lag) actuarial valuation of NYCERS used to determine the
Updated Preliminary Fiscal Year 2015 employer contributions.
The census data used for the estimates of additional employer contrib-
utions presented herein are based on average salaries of new entrants
utilized in the Updated Preliminary June 30, 2013 (Lag) actuarial valu-
ations used to determine Updated Preliminary Fiscal Year 2015 employer
contributions of NYCERS.
The 382 Tier VI Sanitation Members as of June 30, 2013 had an average
age of approximately 35, average service of approximately 1.0 years and
an average salary of approximately $47,500.
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 June 30, 2013 (Lag) actuarial
valuations used to determine Updated Preliminary Fiscal Year 2015
employer contributions of NYCERS and adjusted for revised ADR and Acci-
dental Death eligibility provisions.
The probabilities of accidental disability used for Tier VI Sanitation
Members equal those currently used for Tier IV Sanitation Members.
For determining the change in APVB and increase in employer costs to
NYCERS, the actuarial assumptions and methods are the same as those used
in the June 30, 2013 (Lag) actuarial valuation of NYCERS except that
probabilities of Ordinary Disability and Ordinary Death have been
S. 5656 47
reduced by 5% and 10%, respectively, and the probabilities of Accidental
Disability and Accidental Death have been increased by the same amounts
of reduction in the probabilities of Ordinary Disability and Ordinary
Death, respectively.
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 Sanitation Members are not covered by
such benefits.
To the extent that the enactment of this proposed legislation would
cause a greater (lesser) number of Tier VI Sanitation Members to be
reclassified from Ordinary Disability to Accidental Disability Retire-
ment or from Ordinary Death to Accidental Death, or to the extent that
Tier VI Sanitation Members who would not otherwise ever choose to apply
and then receive an Ordinary Disability Retirement benefit or an Acci-
dental Disability Retirement benefit, then the additional APVB and
employer contributions shown herein would be greater (lesser).
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 into Tier VI Sanitation Members were projected to replace
the Sanitation members expected to leave the active population to main-
tain a steady-state population.
The following Table 3 presents the total number of active employees of
Sanitation used in the projections, assuming a level work force, and the
cumulative number (i.e., net of withdrawals) of Tier VI Members as of
each June 30 from 2013 through 2017.
Table 3
Surviving Actives from Census on June 30, 2013
and
Cumulative New Tier VI Sanitation Members from 2013
Used in the Projections*
June 30 Tier I, II, Tier VI Total
III & IV
2013 6,579 382 6,961
2014 6,150 811 6,961
2015 5,858 1,103 6,961
2016 5,495 1,466 6,961
2017 5,239 1,722 6,961
* Total active members included in the projections assume a level work
force based on the June 30, 2013 (Lag) actuarial valuation census data.
Assumes presumptions apply to Tier VI Sanitation members.
For purposes of estimating the impact of the Tier VI Escalation for
retired Tier VI Sanitation Members, consistent with an underlying
Consumer Price Inflation ("CPI") assumption of 2.5% per year, Tier VI
Escalation of 2.5% per year has been assumed.
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.
ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to deter-
mine the financial impact of the proposed legislation discussed in this
S. 5656 48
Fiscal Note are those appropriate for budgetary models and determining
annual employer contributions to NYCERS.
However, the economic assumptions (current and proposed) 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 Acting
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 2015 Legislative Session. It is Fiscal Note 2015-17, dated
March 19, 2015 prepared by the Acting Chief Actuary of the New York City
Employees' Retirement System.
