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



                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.
                                                                   LBD08565-08-9

        S. 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 that

        S. 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.
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