Senate Bill S5547A

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 5547--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              May 16, 2013
                               ___________

Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
  printed to be committed to the Committee on Civil Service and Pensions
  -- recommitted to the Committee  on  Civil  Service  and  Pensions  in
  accordance  with  Senate  Rule 6, sec. 8 -- 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 of certain New York city correction members

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Paragraph  1  of  subdivision  b  of section 507-a of the
retirement and social security law, as added by chapter 452 of the  laws
of 1983, is amended to read as follows:
  1.  Have  at  least  ten  years of total service credit, EXCEPT THAT A
MEMBER IN THE UNIFORMED PERSONNEL OF THE NEW  YORK  CITY  DEPARTMENT  OF
CORRECTION  MAY FILE AN APPLICATION WITHOUT REGARD TO LENGTH OF SERVICE,
and
  S 2. This act shall take effect immediately.
  FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
  This proposed legislation would amend Retirement and  Social  Security
Law  ("RSSL")  Section  507-a to modify the eligibility requirements for
Ordinary Disability Retirement ("ODR") of employees of the New York City
Department of Correction ("Corrections") who are Tier III members of the
New York City Employees' Retirement System ("NYCERS").
  For purposes of this  Fiscal  Note,  the  reference  to  employees  of
Corrections  who  are  Tier III members of NYCERS refers to such members
joining NYCERS from July 27, 1976 through March 31, 2012.
  The Effective Date of the proposed legislation would be  the  date  of
enactment.
  IMPACT  ON COVERAGE: If enacted, the proposed legislation would elimi-
nate  the  minimum  service  eligibility  requirements   of   Tier   III

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD09244-02-4
              

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Corrections  members  of  NYCERS ("Covered Participants") to qualify for
ODR benefits available under RSSL Section 507-a.
  IMPACT ON BENEFITS: Currently, Tier III Corrections members who become
disabled  have two alternative, possible ODR benefits for which they may
apply, if eligible:
  A. ODR - Integrated Formula (RSSL Section 506): If a disability quali-
fies a member for primary Social Security Disability  benefits  and  the
member  has  accumulated at least 5 years of service credit, such member
would be eligible for an immediate ODR retirement allowance equal to the
greater of:
  1) 33 1/3% of Final Average Salary (("FAS") -  based  on  the  highest
three-year average salary), or
  2) 2% of FAS multiplied by credited service (not in excess of 30 years
of service),
  less  50% of the primary Social Security Disability Benefit (as deter-
mined under RSSL Section 511),
  less 100% of the Workers' Compensation Benefit.
  B. ODR - Corrections Formula (RSSL Section 507-a): If  the  member  is
determined  to  be  disabled by NYCERS' Medical Board and the member has
accumulated at least 10 years of service credit, such  member  would  be
eligible  for an immediate ODR retirement allowance equal to the greater
of:
  1) 1/3 of FAS, or
  2) 1/60 of FAS multiplied by credited service.
  If such member is also eligible for Service Retirement, the ODR  bene-
fit cannot be less than the retirement allowance for Service Retirement.
  Under  the  proposed  legislation, if enacted, the ODR formula benefit
under RSSL  Section  507-a  would  become  available  to  any  Tier  III
Corrections  member  who becomes disabled, subject to approval under the
applicable procedures established by NYCERS, and not, on and  after  the
Effective Date, include any minimum service requirement.
  For  purposes  of  this  Fiscal Note, the Actuary has assumed that the
proposed ODR benefits would be available only prospectively to  eligible
Covered  Participants retiring for disability on and after the Effective
Date.
  FINANCIAL IMPACT - OVERVIEW: Insofar as this  legislation  relates  to
NYCERS,  the  ultimate  cost  of  this proposed legislation would be any
additional benefits paid compared with current law.
  The amount and timing of the financial impact of the  proposed  legis-
lation would depend on the number, salaries, ages and lengths of service
of Tier III Corrections members who become eligible for ODR benefits and
the  actuarial  assumptions and methods employed by the Actuary for such
purposes.
  FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: Based on the  anticipated
group of Covered Participants and based on the actuarial assumptions and
methods  herein,  the  enactment  of  this  proposed  legislation  would
increase the Actuarial Present Value of Benefits ("APVB") for NYCERS  by
approximately $0.9 million as of June 30, 2013.
  Under  the Entry Age Actuarial Cost Method ("EAACM") used to determine
employer contributions to NYCERS, there would  be  an  increase  in  the
Actuarial  Present Value of Future Employer Normal Cost of $10.3 million
offset by  a  decrease  in  the  Unfunded  Actuarial  Accrued  Liability
("UAAL") of approximately $9.4 million.
  FINANCIAL  IMPACT  - ANNUAL EMPLOYER COSTS: In accordance with Section
13.638.2(k-2) of the  Administrative  Code  of  the  City  of  New  York
("ACNY"),  new  UAAL attributable to benefit changes are to be amortized

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as determined by the Actuary but generally over  the  remaining  working
lifetime  of  those impacted by the benefit changes which has been esti-
mated to be 15 years.
  With  respect  to NYCERS, based on the Actuary's actuarial assumptions
and methods used in the June 30, 2013 valuation of the NYCERS and  those
described  later  in  this  Fiscal  Note, the enactment of this proposed
legislation  would  increase  annual  employer  costs  by  approximately
$90,000 per year.
  This  increase  in employer costs has been estimated assuming that the
increase in UAAL would be financed over a 15-year  period  (14  payments
under One-Year Lag Methodology) using level dollar payments.
  If  enacted  into law prior to June 30, 2015, increased employer costs
would be determined for Fiscal Year 2015.
  The additional annual employer contributions for this proposed  legis-
lation would be expected to equal the additional annual employer costs.
  The  ultimate  impact of the proposed legislation on employer contrib-
utions would depend on the number and timing of the additional ODRs that
would result from the change in eligibility for  ODRs  if  the  proposed
legislation were enacted.
  OTHER  COSTS:  Not  measured  in  this  Fiscal  Note  are any possible
increased administrative costs  or  additional  post-retirement  medical
costs.
  CENSUS  DATA:  Estimates  of  increases  in  APVB,  employer costs and
employer contributions are based on the active census data used for  the
June  30,  2013  actuarial valuation of NYCERS, including 7,791 Tier III
Corrections members with salaries of approximately $725.5 million.
  Of such total number only 3,521  Tier  III  Corrections  members  with
salaries  of  approximately  $282.2  million  have less than 10 years of
credited service as of June 30, 2013 and could possibly benefit from the
proposed legislation.
  For purposes of this  Fiscal  Note,  the  reference  to  employees  of
Corrections  who  are  Tier III members of NYCERS refers to such members
joining NYCERS from July 27, 1976 through March 31, 2012.
  ACTUARIAL ASSUMPTIONS AND METHODS: Additional APVB, UAAL and  employer
costs presented herein have been calculated based on the Actuary's actu-
arial  assumptions  and  methods  in  effect for the June 30, 2013 (Lag)
actuarial  valuations  used  to  determine  Fiscal  Year  2015  employer
contributions of NYCERS.
  Additional  annual  employer  costs  have  been estimated assuming the
additional APVB are financed through  future  employer  normal  contrib-
utions offset by certain UAAL payments.
  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 Academy of Actuaries to render
the actuarial opinion contained herein.
  FISCAL NOTE IDENTIFICATION: This estimate is  intended  for  use  only
during  the  2014  Legislative Session. It is Fiscal Note 2014-24, dated
May 29, 2014, prepared by the  Chief  Actuary  for  the  New  York  City
Employees' Retirement System.