Bill Text: NY S05898 | 2019-2020 | General Assembly | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relates to providing a final average salary disability retirement benefit to certain participants in World Trade Center rescue, recovery, or cleanup operations.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Passed) 2019-09-11 - SIGNED CHAP.252 [S05898 Detail]
Download: New_York-2019-S05898-Amended.html
Bill Title: Relates to providing a final average salary disability retirement benefit to certain participants in World Trade Center rescue, recovery, or cleanup operations.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Passed) 2019-09-11 - SIGNED CHAP.252 [S05898 Detail]
Download: New_York-2019-S05898-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 5898--B 2019-2020 Regular Sessions IN SENATE May 16, 2019 ___________ Introduced by Sen. GAUGHRAN -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said commit- tee AN ACT to amend the retirement and social security law, in relation to disability retirement benefits for certain participants in World Trade Center rescue, recovery, or cleanup operations The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Paragraph 4 of subdivision d of section 605 of the retire- 2 ment and social security law is renumbered paragraph 5 and a new para- 3 graph 4 is added to read as follows: 4 4. Notwithstanding any other law, rule or regulation to the contrary, 5 any member who had an active membership when such member participated in 6 World Trade Center rescue, recovery, or cleanup operations, as such 7 participation is defined in section two of this chapter, who incurred a 8 qualifying World Trade Center condition, as defined in section two of 9 this chapter, that is determined to have been incurred in the perform- 10 ance and discharge of duty and is the natural and proximate result of an 11 accident not caused by such member's own willful negligence, shall be 12 paid a performance of duty disability retirement allowance equal to 13 three-quarters of final average salary. The payment of such pension 14 shall be subject to the provisions of section sixty-four of this chap- 15 ter. 16 § 2. Section 507 of the retirement and social security law is amended 17 by adding a new subdivision h-1 to read as follows: 18 h-1. Notwithstanding any other law, rule or regulation to the contra- 19 ry, any member who had an active membership when such member partic- 20 ipated in World Trade Center rescue, recovery, or cleanup operations, as EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD08565-08-9S. 5898--B 2 1 such participation is defined in section two of this chapter, who 2 incurred a qualifying World Trade Center condition, as defined in 3 section two of this chapter, that is determined to have been incurred in 4 the performance and discharge of duty and is the natural and proximate 5 result of an accident not caused by such member's own willful negli- 6 gence, shall be paid a performance of duty disability retirement allow- 7 ance equal to three-quarters of final average salary. The payment of 8 such pension shall be subject to the provisions of section sixty-four of 9 this chapter. 10 § 3. Notwithstanding any other provision of law to the contrary, none 11 of the provisions of this act shall be subject to section 25 of the 12 retirement and social security law. 13 § 4. This act shall take effect immediately and apply to all active 14 members who are determined to have incurred a qualifying World Trade 15 Center condition in the performance and discharge of duty that is the 16 natural and proximate result of an accident not caused by such member's 17 own willful negligence prior to the effective date of this act. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: This bill would amend the benefits of certain members of public retirement systems who are subject to the provisions of Article 14 or Article 15 of the Retirement and Social Security Law who contract any form of disease or disability related to exposure to any elements in connection with the World Trade Center rescue, recovery or cleanup oper- ations. The annual accidental disability benefit would be 75% of a member's final average salary less workers compensation, regardless of a member's plan coverage. Currently, eligible members receive the acci- dental disability benefit specified in the plan under which they are covered, which for most Article 14 and 15 members is 1/3 of final aver- age salary. This improved benefit would be payable only to current members or their beneficiaries. Current retirees and their beneficiaries would not be affected by this bill. If this bill is enacted, the cost of the revised benefit will depend upon the applicant's age, service, salary, plan, and benefit type other- wise payable, but is expected to cost up to 4 times final average salary per individual. Insofar as this bill would affect the New York State and Local Employ- ees' Retirement System, there are currently 610 active members, with a combined salary of $6.4 million, who have filed an Application for World Trade Center Notice who could potentially receive benefits under this bill. A precise cost for future years cannot be determined at this time. Any increased cost would be shared by the State of New York and participat- ing employers of the New York State and Local Employees' Retirement System. Summary of relevant resources: The membership data used in measuring the impact of the proposed change was the same as that used in the March 31, 2018 actuarial valu- ation. Distributions and other statistics can be found in the 2018 Report of the Actuary and the 2018 Comprehensive Annual Financial Report. The actuarial assumptions and methods used are described in the 2015, 2016, 2017 and 2018 Annual Report to the Comptroller on Actuarial Assumptions, and the Codes, Rules and Regulations of the State of New York: Audit and Control.S. 5898--B 3 The Market Assets and GASB Disclosures are found in the March 31, 2018 New York State and Local Retirement System Financial Statements and Supplementary Information. I am a member of the American Academy of Actuaries and meet the Quali- fication Standards to render the actuarial opinion contained herein. This fiscal note does not constitute a legal opinion on the viability of the proposed change nor is it intended to serve as a substitute for the professional judgment of an attorney. This estimate, dated June 13, 2019, and intended for use only during the 2019 Legislative Session, is Fiscal Note No. 2019-144, prepared by the Actuary for the New York State and Local Retirement System. SUMMARY OF BILL: With respect to the New York City Pension Funds and Retirement Systems (NYCRS), the proposed legislation would amend provisions of the Retirement and Social Security Law (RSSL) to grant to active NYCRS members, who are subject to RSSL Articles 14 or 15 and incur a World Trade Center (WTC) Qualifying Condition, a performance of duty disability retirement equivalent to 75% of the member's Final Aver- age Salary (FAS). Effective Date: Upon Enactment. IMPACT ON BENEFITS PAYABLE: Under the proposed legislation, the bene- fits for active members of NYCRS who retire after the effective date with a WTC Qualifying Condition would equal a retirement allowance of: * 75% multiplied by FAS, Reduced by: * 100% of Workers' Compensation benefits (if any) payable (as required by RSSL Section 64). Please note that, generally, uniformed WTC retirees are currently entitled to a 75% of FAS benefit (i.e. members of the New York City Police Pension Fund (POLICE), the New York City Fire Pension Fund (FIRE), and Sanitation, Correction, EMT, and Deputy Sheriff members of the New York City Employees' Retirement System (NYCERS)). Therefore, the application of the proposed legislation would likely be limited to active Tier 3 and 4 civilian members of NYCERS, the Teachers' Retirement System of the City of New York (NYCTRS), and the New York City Board of Education Retirement System (BERS). Although certain NYCERS members are ineligible for Workers' Compen- sation benefits and therefore would not have their benefit subject to an offset, for purposes of this Fiscal Note, it is assumed that the Work- ers' Compensation offset provisions cited in Sections 1 and 2 of the proposed legislation would not apply to NYCRS members because such members are not paid retirement benefits under RSSL Article 2, which is a requirement for the application of the offset provision contained in RSSL Section 64. FINANCIAL IMPACT - OVERVIEW: Although there are currently approximate- ly 8,000 submitted WTC Notice of Participation Forms for applicable active members of NYCERS, TRS, and BERS, the number of members from this group, and any additional eligible members who could potentially benefit from this proposed legislation in the future cannot be readily deter- mined. Therefore, the estimated financial impact has been calculated on a per event basis equal to the increase in the Present Value of Future Benefits (PVFB) for an average member who is approved for WTC benefits and who is assumed to benefit from the proposed legislation. In deter- mining the increase in the PVFB for members who are assumed to benefit from the proposed legislation, it has been assumed that 50% of the members who would retire with a WTC benefit were those who would have retired under an Ordinary Disability Retirement (ODR) benefit and thatS. 5898--B 4 the remaining 50% of members who would retire with a WTC benefit were those who would have continued working if the proposed legislation were not passed. With respect to an individual member, the additional cost of this proposed legislation could vary greatly depending on the member's length of service, age, and salary history. FINANCIAL IMPACT - PRESENT VALUES: Based on the census data and the actuarial assumptions and methods described herein, the enactment of this proposed legislation would increase the PVFB by approximately $240,000, on average, for each occurrence of WTC benefits provided under this proposed legislation. FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: Enactment of this proposed legislation would increase employer contributions, where such amount would depend on the number of members affected as well as other characteristics including the age, years of service, and salary history of each member. As there is insufficient data currently available to estimate the number of members who might be approved for WTC benefits, the financial impact would be recognized at the time of event. Consequently, changes in employer contributions have been estimated assuming that the increase in the PVFB will be financed over a time period comparable to that used for actuarial losses under the Entry Age Normal cost method. Using this approach, the additional PVFB would be amortized over a closed 15-year period (14 payments under the One-Year Lag Methodology) using level dollar payments. Based on the Actuary's actuarial assumptions and methods in effect as of June 30, 2018, the enactment of this proposed legislation is esti- mated to increase annual employer contributions by approximately $28,000 for each WTC benefit provided under this proposed legislation. With respect to the timing, increases in employer contributions would depend upon when members would retire but, generally, increased employer contributions will first occur the second fiscal year following approval of the WTC benefit. For example, if 10 members who would benefit from the proposed legis- lation are approved for WTC benefits in the fiscal year ending June 30, 2019, then employer contributions could increase by about $280,000 per year starting in fiscal year 2021. OTHER COSTS: Not measured in this Fiscal Note are the following: * The initial, additional administrative costs of the NYCRS to imple- ment the proposed legislation. * The impact of this proposed legislation on Other Postemployment Benefit (OPEB) costs. CENSUS DATA: A large majority of the active NYCRS members who have submitted WTC notices and who could potentially benefit from the proposed legislation are members of NYCERS. Therefore, the estimates presented herein are based on the census data used in the Preliminary June 30, 2018 (Lag) actuarial valuation of NYCERS to determine the Preliminary Fiscal Year 2020 employer contributions. The approximate 8,000 active members who have submitted WTC Notice of Participation Forms are a subset of the 61,985 active members in NYCERS as of June 30, 2018 whose date of appointment is prior to September 11, 2001 and are not currently entitled to a WTC benefit equal to 75% of FAS and, therefore, could potentially benefit from the proposed legislation. These 61,985 active members had an average age of approximately 55.9 years, average service of approximately 22.0 years, and an average sala-S. 5898--B 5 ry of approximately $81,900. This group consisted of 61,966 Tier 4 members and 19 Tier 6 members. ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the PVFB and annual employer contributions presented herein have been calculated based on the actuarial assumptions and methods in effect for the June 30, 2018 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year 2020 employer contributions of NYCERS. RISK AND UNCERTAINTY: The costs presented in this Fiscal Note depend highly on the actuarial assumptions and methods used and are subject to change based on the realization of potential investment, demographic, contribution, and other risks. If actual experience deviates from actu- arial assumptions, the actual costs could differ from those presented herein. Costs are also dependent on the actuarial methods used, and therefore different actuarial methods could produce different results. Quantifying these risks is beyond the scope of this Fiscal Note. STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu- ary for, and independent of, the New York City Retirement Systems and Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled Actuary under the Employee Retirement Income and Security Act of 1974, a Member of the American Academy of Actuaries, and a Fellow of the Confer- ence of Consulting Actuaries. I meet the Qualification Standards of the American Academy of Actuaries to render the actuarial opinion contained herein. To the best of my knowledge, the results contained herein have been prepared in accordance with generally accepted actuarial principles and procedures and with the Actuarial Standards of Practice issued by the Actuarial Standards Board. FISCAL NOTE IDENTIFICATION: This Fiscal Note 2019-30 dated June 7, 2019 was prepared by the Chief Actuary for the New York City Employees' Retirement System, the New York City Teachers' Retirement System, and the New York City Board of Education Retirement System. This estimate is intended for use only during the 2019 Legislative Session.