S T A T E O F N E W Y O R K
________________________________________________________________________
6904--A
I N S E N A T E
April 9, 2012
___________
Introduced by Sen. LARKIN -- 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
AN ACT to amend the retirement and social security law, in relation to
providing credit to members of public retirement systems of the state
for military service; and making an appropriation therefor
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 1000 of the retirement and social security law, as
added by chapter 548 of the laws of 2000, subdivision 9 as added by
chapter 547 of the laws of 2002 and subdivision 10 as added by chapter
18 of the laws of 2012, is amended to read as follows:
S 1000. Military service credit. Notwithstanding any law to the
contrary, a member of a public retirement system of the state, as
defined in subdivision twenty-three of section five hundred one of this
chapter, shall be eligible for credit for military service as hereinaft-
er provided:
1. A member, upon application to such retirement system, may obtain a
total not to exceed three years of service credit for up to three years
of military duty, as defined in section two hundred forty-three of the
military law, if the member was honorably discharged from the military
[and all or part of such military service was rendered during the
following periods: (a) commencing December seventh, nineteen hundred
forty-one and terminating December thirty-first, nineteen hundred
forty-six; (b) commencing June twenty-seventh, nineteen hundred fifty
and terminating January thirty-first, nineteen hundred fifty-five; or
(c) commencing February twenty-eighth, nineteen hundred sixty-one and
terminating May seventh, nineteen hundred seventy-five;
2. A member, upon application to such retirement system, may obtain a
total not to exceed three years of service credit for up to three years
of military duty, as defined in section two hundred forty-three of the
military law, if honorably discharged therefrom, if all or part of such
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD06279-09-2
S. 6904--A 2
services was rendered in the military conflicts referenced below, as
follows:
(a) hostilities participated in by the military forces of the United
States in Lebanon, from the first day of June, nineteen hundred eighty-
three to the first day of December, nineteen hundred eighty-seven, as
established by receipt of the armed forces expeditionary medal, the navy
expeditionary medal, or the marine corps expeditionary medal;
(b) hostilities participated in by the military forces of the United
States in Grenada, from the twenty-third day of October, nineteen
hundred eighty-three to the twenty-first day of November, nineteen
hundred eighty-three, as established by receipt of the armed forces
expeditionary medal, the navy expeditionary medal, or the marine corps
expeditionary medal;
(c) hostilities participated in by the military forces of the United
States in Panama, from the twentieth day of December, nineteen hundred
eighty-nine to the thirty-first day of January, nineteen hundred ninety,
as established by receipt of the armed forces expeditionary medal, the
navy expeditionary medal, or the marine corps expeditionary medal; or
(d) hostilities participated in by the military forces of the United
States, from the second day of August, nineteen hundred ninety, to the
end of such hostilities in case of a veteran who served in the theater
of operations including Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the
United Arab Emirates, Oman, the Gulf of Aden, the Gulf of Oman, the
Persian Gulf, the Red Sea, and the airspace above these locations].
[3] 2. A member must have at least five years of credited service (not
including service granted hereunder) to be eligible to receive credit
under this section.
[4] 3. To obtain such credit, a member shall pay such retirement
system, for deposit in the fund used to accumulate employer contrib-
utions, a sum equal to the product of the number of years of military
service being claimed and three percent of such member's compensation
earned during the twelve months of credited service immediately preced-
ing the date that the member made application for credit pursuant to
this section. If permitted by rule or regulation of the applicable
retirement system, the member may pay such member costs by payroll
deduction for a period which shall not exceed the time period of mili-
tary service to be credited pursuant to this section. In the event the
member leaves the employer payroll prior to completion of payment, he or
she shall forward all remaining required payments to the appropriate
retirement system prior to the effective date of retirement. If the full
amount of such member costs is not paid to the appropriate retirement
system prior to the member's retirement, the amount of service credited
shall be proportional to the total amount of the payments made prior to
retirement.
[5] 4. In no event shall the credit granted pursuant to this section,
when added to credit granted for military service with any retirement
system of this state pursuant to this or any other provision of law,
exceed a total of three years.
[6] 5. To be eligible to receive credit for military service under
this section, a member must make application for such credit before the
effective date of retirement. [Notwithstanding the foregoing provisions
of this subdivision, an individual who retired on or after December
twenty-first, nineteen hundred ninety-eight and before the effective
date of this section may make application for credit pursuant to this
section within one year following the effective date of this section, in
S. 6904--A 3
which event, the cost to the retiree would be based on the twelve month
period immediately preceding retirement.]
[7] 6. All costs for service credited to a member pursuant to this
section, other than the member costs set forth in subdivision [three]
TWO of this section, shall be paid by the state and all employers which
participate in the retirement system in which such member is granted
credit.
[8] 7. A member who has purchased military service credit pursuant to
section two hundred forty-four-a of the military law shall be entitled
to a refund of the difference between the amount paid by the member for
such purchase and the amount that would be payable if service had been
purchased pursuant to this section.
[9] 8. Notwithstanding any other provision of law, in the event of
death prior to retirement, amounts paid by the member for the purchase
of military service credit pursuant to this section shall be refunded,
with interest, to the extent the military service purchased with such
amounts does not produce a greater death benefit than would have been
payable had the member not purchased such credit.
Notwithstanding any other provision of law, in the event of retire-
ment, amounts paid by the member for the purchase of military service
credit pursuant to this section shall be refunded, with interest, to the
extent the military service purchased with such amounts does not produce
a greater retirement allowance than would have been payable had the
member not purchased such credit.
[10.] 9. Anything to the contrary in subdivision [four] THREE of this
section notwithstanding, to obtain such credit, a member who first joins
a public retirement system of the state on or after April first, two
thousand twelve shall pay such retirement system, for deposit in the
fund used to accumulate employer contributions, a sum equal to the prod-
uct of the number of years of military service being claimed and six
percent of such member's compensation earned during the twelve months of
credited service immediately preceding the date that the member made
application for credit pursuant to this section.
S 2. The amount specified in this section, or so much thereof as shall
be sufficient to accomplish the purpose designated, is hereby appropri-
ated and authorized to be paid as hereinafter provided, to the public
officers and for the purposes specified, which amount shall be available
for the state fiscal year beginning April 1, 2012.
GENERAL STATE CHARGES
STATE OPERATIONS
GENERAL STATE CHARGES ........................................ 6,000,000
General Fund
State Purposes Account
For the state's contribution to the employ-
ees' retirement system pension accumu-
lation fund and the New York state public
employees group life insurance plan, as
required by section 25 of the Retirement
and Social Security Law, to pay for the
purposes of this act ......................... 6,000,000
S 3. This act shall take effect immediately.
S. 6904--A 4
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would allow up to three (3) years of service credit for
military duty by removing all existing requirements that such military
service be performed during certain war periods, during certain hostil-
ities while in the theater of operations or upon the receipt of an
expeditionary medal. However, the total service credit granted for
active and peacetime military service shall not exceed three (3) years.
The member would be required to make a payment of three percent of
current compensation per year of additional service credit granted by
this bill. Members must have at least five (5) years of credited
service (not including military service).
Insofar as this bill affects the New York State and Local Employees'
Retirement System and the New York State and Local Police and Fire
Retirement System, if this bill were enacted there would be an estimated
first year cost of approximately $2.7 million to the State of New York,
$3.3 million to participating employers in the New York State and Local
Employees' Retirement System and $1.7 million to the participating
employers in the New York State and Local Police and Fire Retirement
System.
In addition to the above costs, there would be additional costs for
future members of the Retirement System's who have such military
service.
This estimate, dated December 13, 2011 and intended for use only
during the 2012 Legislative Session, is Fiscal Note No. 2012-26,
prepared by the Actuary for the New York State and Local Employees'
Retirement System and the New York State and Local Police and Fire
Retirement System.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
PROVISIONS OF PROPOSED LEGISLATION: With respect to certain New York
City Retirement Systems ("NYCRS"), this proposed legislation would amend
New York State Retirement and Social Security Law ("RSSL") Section 1000
to provide certain members of the New York City Employees' Retirement
System ("NYCERS"), the New York City Teachers' Retirement System
("NYCTRS"), the New York City Board of Education Retirement System
("BERS"), the New York City Police Pension Fund ("POLICE") and the New
York City Fire Department Pension Fund ("FIRE") the opportunity to
obtain additional retirement service credits for certain Military
Service.
This proposed legislation would permit any NYCRS member, prior to the
effective date of retirement, to make application for these additional
service credits.
To obtain such Military Service credits, members would be required to
pay to the appropriate NYCRS, for each year of Military Service
purchased, a sum equal to 3.0% of such member's compensation earned
during the twelve months of credited service immediately preceding the
date that the member makes application for credit.
MEMBERS IMPACTED: Insofar as this proposed legislation relates to the
NYCRS, the number of members who could potentially benefit from this
proposed legislation cannot be readily determined.
IMPACT ON BENEFITS: With respect to the NYCRS, a member who served in
the U.S. military and received an honorable discharge would be permit-
ted, after completing five years of credited service (exclusive of the
service credit that could be purchased under this proposed legislation),
to purchase a maximum of three years Military Service (inclusive of any
prior purchases of Military Service credit).
S. 6904--A 5
In order to purchase the Military Service credits provided in this
proposed legislation, a member must have been honorably discharged
following a period of "military duty" as defined in New York State Mili-
tary Law Section 243.
If a member's Military Service meets these conditions, then that
member would be permitted to purchase a maximum of three years of Mili-
tary Service (inclusive of any previously-received Military Service
credit) attributable to any period of the member's military career.
For purposes of the respective NYCRS, each year of Military Service
credit purchased would apply toward providing the member with a year of
benefit accrual under the particular benefit formula covering the
member.
In certain circumstances, the member also may be entitled to utilize
such Military Service as qualifying service for benefit eligibility
purposes.
For purposes of this Fiscal Note, it has been assumed that members who
purchase Military Service in accordance with this proposed legislation
would generally be entitled to count such service for benefit accrual
purposes and for the purpose of qualifying for benefits.
FINANCIAL IMPACT - OVERVIEW: With respect to an individual member, the
additional cost of this proposed legislation would depend on the length
of all New York City service, age, salary history and Plan in which the
member participates, as well as the number of years of service credit
purchased.
With respect to employers participating in the NYCRS, the ultimate
employer coast of the this proposed legislation would be determined by
the increase in benefits to be paid, the impact of certain benefits
commencing earlier, a shorter working lifetime and the reduction in
certain future member contributions.
FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With respect to the NYCRS
and based on the census data and assumptions herein, the enactment of
this proposed legislation would increase the Actuarial Present Value
("APV") of benefits ("APVB") by approximately $201.7 million as of June
20, 2011.
In addition, with respect to the NYCRS, the APV of future member
contributions (primarily attributable to the payments by members of 3.0%
of salary per year of Military Service purchased) would increase by
approximately $31.9 million when measured as of June 30, 2011.
Consequently, with respect to the NYCRS, the APV of net future employ-
er contributions would increase by approximately $169.8 million as of
June 20, 2011.
FINANCIAL IMPACT - ANNUAL EMPLOYER COST: With respect to the NYCRS,
based on the Actuary's actuarial assumptions and methods in effect as of
June 30, 2010, the enactment of this proposed legislation would increase
annual employer costs by approximately $23.6 million per year.
FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: With respect to the NYCRS,
based on the Actuary's actuarial assumptions and methods in effect as of
June 30, 2010, the enactment of this proposed legislation would ulti-
mately increase employer contributions by approximately the estimated
additional annual employer costs.
FINANCIAL IMPACT - SUMMARY: The following table summarizes the esti-
mated financial impact of this proposed legislation on the NYCRS.
Estimated Financial Impact to Allow Members of the NYCRS To Purchase up
to Three Years of Military Service Credit{1}
S. 6904--A 6
($ Millions)
________________________________________________________________________
Estimated
Additional First Year
Additional APV of Future Additional
Retirement APV of Employer Employer
System Benefits Contributions{2} Costs{3}
________________________________________________________________________
NYCERS $ 65.2 $ 54.2 $ 7.6
NYCTRS $ 25.6 $ 20.8 $ 2.1
BERS $ 6.8 $ 5.7 $ 0.8
POLICE $ 84.8 $ 72.5 $11.1
FIRE $ 19.3 $ 16.6 $ 2.0
______ ______ ______
TOTAL $201.7 $169.8 $23.6
______________________
{1} APV are determined as of June 30, 2010 and rolled forward to June
30 2011 based on the Actuary's actuarial assumptions and methods as of
June 30, 2010 used to determine Preliminary Fiscal Year 2012 employer
contributions.
{2} Equals increase in APVB minus increase in APV of future member
contributions.
{3} Estimated Additional Employer Costs are determined without regard
to the funded status of the Retirement Systems and represent the best
estimates of the ultimate annual financial burden of the proposed legis-
lation. Estimated Additional Employer Contributions would ultimately
approximate Estimated Additional Employer Costs.
ADDITIONAL EMPLOYER COSTS - GENERAL: In general, the real cost of the
enactment of this proposed legislation would be the additional benefits
paid.
FINANCIAL IMPACT - POTENTIAL CHANGES IN ACTUARIAL ASSUMPTIONS AND
METHODS: The impact of enactment of the proposed legislation provided in
this Fiscal Note has been based on the continued use of certain current
actuarial assumptions and methods.
However, this set of actuarial assumptions and methods does not repre-
sent the only possible approach for funding NYCRS.
Historically, actuarial assumptions and methods have been reviewed on
average every five years in connection with an actuarial experience
study mandate by the New York City Charter Section 96.
Following this review, the Actuary generally proposes changes in actu-
arial assumptions and methods that he believes are appropriate and
reasonably related to such experience period and future expectations.
The most recent review was published during December 2011 and the
Actuary has proposed new packages of actuarial assumptions and methods
to be effective for use in determining employer contributions beginning
Fiscal Year 2012.
These new actuarial assumptions are likely to result in increased APVB
and employer costs.
The estimated financial impact of proposed legislation incorporating
those proposed actuarial assumptions and methods is expected to differ,
possibly significantly, from the financial impact computed using the
actuarial assumptions and methods continued from Fiscal Year 2011.
Further, the near certainty of payment of benefits from the NYCRS (due
to the substantive level of funding and New York State Constitutional
S. 6904--A 7
Protection of benefits), suggests that it may be appropriate to also
consider a more economic-based, market-related estimate of the value of
those benefits (i.e., an Economic Value estimate). Such value of bene-
fits would likely be based on an expected pattern of benefits payments
determined using discount rates consistent with those derived from
default-free securities of similar duration.
Under current economic conditions, the APVB, employer cost and employ-
er contributions determined under Economic Value concepts would be
greater than those shown herein.
OTHER COSTS: Not measured in this Fiscal Note is the impact of this
proposed legislation on the Manhattan and Bronx Surface Transit Operat-
ing Authority ("MaBSTOA") or on State or Local employers with respect to
their participation in the New York State and Local Retirement Systems
("NYSLRS") or the New York State Teachers' Retirement System ("NYSTRS").
Also, this Fiscal Note does not include analyses of the impact of this
proposed legislation on the expected increases in administrative costs
or costs for Other Post-Employment Benefits ("OPEB").
CENSUS DATA: The census data used for estimates of APV of benefits and
employer contributions presented herein are the active members included
in the June 30, 2010 (Lag) actuarial valuations of NYCERS, NYCTRS, BERS,
POLICE and FIRE used to determine the Preliminary Fiscal Year 2012
employer contributions.
ACTUARIAL ASSUMPTIONS AND METHODS: Additional APV of benefits, of
member contributions and of employer contributions have been estimated
as of June 30, 2010 using various approximating techniques and assump-
tions by the Actuary, including, but not limited to:
* A certain percentage of Veterans being honorably discharged.
* A certain percentage of honorably discharged Veterans being disa-
bled.
* Different percentages of members by NYCRS would have prior Military
Service.
* Each eligible member would purchase an average of 2.5 years of the
Military Service.
For purposes of this Fiscal Note, the additional APV have been rolled-
forward to July 30, 2011.
Changes in employer contributions have been estimated assuming the
increase in the APV of future employer normal contributions would be
financed through future normal contributions without using the Actuary's
One-Year Lag methodology.
As stated earlier, the Actuary has proposed new packages of actuarial
assumptions and methods to be effective for use in determining employer
contributions beginning Fiscal Year 2012. As such, not all assumptions
employed in determining the results contained in this Fiscal Note for
Fiscal Years 2012 and later represent the Actuary's current best esti-
mate of future experience. However, most of the assumptions and methods
used to determine the results contained herein are generally those
adopted by the NYCRS Boards of Trustees and enacted by the State Legis-
lature and Governor, and provide consistency with the employer contrib-
utions being presented.
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 the NYCRS.
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
S. 6904--A 8
benefits would likely differ significantly from those developed by the
budgetary models.
STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the 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 2012 Legislative Session. It is Fiscal Note 2012-07, dated
March 15, 2012, prepared by the Chief Actuary for the New York City
Employees' Retirement System, the New York City Teachers' Retirement
System, the New York City Board of Education Retirement System, the New
York City Police Pension Fund and the New York City Fire Department
Pension Fund.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
This bill would amend Article 20 of the Retirement and Social Security
Law to allow active members of public retirement systems of New York
State to claim service credit for up to three years of military service,
regardless of when it was performed. Currently, active members can
receive service credit for military service performed, but only during
specified periods of war. A member must have at least five years of
credited service to be eligible and make application for such credit
before the effective date of retirement. To obtain such credit, a member
must deposit in the pension accumulation fund three percent of his or
her current annual full-time rate of compensation per year of military
service claimed.
The annual cost to the employers of members of the New York State
Teachers' Retirement System for this benefit is estimated to be $3.7
million or .03% of payroll if this bill is enacted.
The source of this estimate is Fiscal Note 2012-21 dated March 7, 2012
prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2012 Legislative Session.
I, Richard A. Young, am the Actuary for the New York State Teachers'
Retirement System. I am a member of the American Academy of Actuaries
and I meet the Qualification Standards of the American Academy of Actu-
aries to render the actuarial opinion contained herein.
