Senate Bill S5780A

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

                                 5780--A

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                              June 14, 2013
                               ___________

Introduced  by  Sen.  GRIFFO -- 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
  military service credit

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

  Section  1.  Paragraph  (a)  of  subdivision  2 of section 1000 of the
retirement and social security law, as added by chapter 548 of the  laws
of 2000, is amended to read as follows:
  (a)  hostilities  participated in by the military forces of the United
States in Lebanon, from the [first] TWENTY-FIRST day of  [June]  AUGUST,
nineteen hundred [eighty-three] EIGHTY-TWO 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;
  S  2. Notwithstanding any other provision of law to the contrary, none
of the provisions of this act shall be subject  to  section  25  of  the
retirement and social security law.
  S 3. This act shall take effect immediately.
  FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
  This  bill  would  extend the benefits of Chapter 548, Laws of 2000 to
members of public retirement systems in New York State who rendered  any
military   service  during  the  period  of  conflict  in  Lebanon  from
8/21/82-12/1/87. Currently, the period is defined to be  6/1/83-12/1/87.
The  total  service  credit  granted  for any military service shall not
exceed three (3) years. Members must have at least five years of credit-
ed service (not including military service). Tier 1-5 members  would  be

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD01487-08-4
              

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required to make a payment of three percent of their most recent compen-
sation  per year of additional service credit granted by this bill. Tier
6 members would be required to make a payment of six  percent  of  their
most recent compensation per year of additional service credit.
  If this bill is enacted, insofar as this proposal affects the New York
State and Local Employees' Retirement System (ERS), it is estimated that
the  past service cost will average approximately 12% (9% for Tier 6) of
an affected members' compensation for each year  of  additional  service
credit that is purchased.
  Insofar  as  this proposal affects the New York State and Local Police
and Fire Retirement System (PFRS), it is estimated that the past service
cost will average approximately 17% (14% for  Tier  6)  of  an  affected
members'  compensation  for  each  year  of  additional  service that is
purchased.
  The exact number of current members as  well  as  future  members  who
could be affected by this legislation cannot be readily determined.
  ERS  Costs:  These  costs would be shared by the State of New York and
the participating employers in the ERS.
  PFRS Costs: These costs would be shared by the State of New  York  and
the participating employers in the PFRS.
  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, 2013  actuarial  valu-
ation.    Distributions  and  other  statistics can be found in the 2013
Report of the  Actuary  and  the  2013  Comprehensive  Annual  Financial
Report.
  The  actuarial assumptions and methods used are described in the 2010,
2011, 2012 and 2013  Annual  Report  to  the  Comptroller  on  Actuarial
Assumptions,  and  the  Codes  Rules and Regulations of the State of New
York: Audit and Control.
  The Marker Assets and GASB Disclosures are found in the March 31, 2013
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 estimate, dated October 28, 2013 and intended for use only during
th 2014 Legislative Session, is Fiscal Note No. 2014-13, 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:
  This bill would amend subdivision 2 of Section 1000 of the  Retirement
and  Social  Security  Law  by revising the starting date of hostilities
participated in by the military forces of the United States  in  Lebanon
from  June  1,  1983  to  August 21, 1982 for military service crediting
purposes. To obtain credit, a member must make payments as  required  in
Section  1000 of the Retirement and Social Security Law. Tier 1, 2, 3, 4
and 5 members are required to pay three percent of salary earned  during
the  twelve months of credited service immediately preceding the year in
which a claim is made for each year of military service. Tier 6  members
are  required  to  pay  six  percent  of salary earned during the twelve
months of credited service immediately preceding the  year  in  which  a
claim is made for each year of military service.
  It is not possible to determine the total annual cost to the employers
of  members  of the New York State Teachers' Retirement System since the
total amount of service credit which would be claimed  under  this  bill
cannot  be  estimated.  However, the cost to the employers of members of

S. 5780--A                          3

the New York State  Teachers'  Retirement  System  is  estimated  to  be
$21,700  per  year of service credited for Tier 1 and 2 members, $20,500
per year of service credited for Tier 3 and 4 members, $20,400 per  year
of  service  credited for Tier 5 members and $15,000 per year of service
credited for Tier 6 members if this bill is enacted. These  costs  would
be  offset by member payments required under Section 1000 of the Retire-
ment and Social Security Law.
  The source of this estimate is Fiscal Note 2014-18 dated February  24,
2014  prepared by the Actuary of the New York State Teachers' Retirement
System and is intended for use only during the 2014 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.
  FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
  PROVISIONS  OF  PROPOSED  LEGISLATION:  The proposed legislation would
amend Retirement and Social Security Law ("RSSL") section 1000 paragraph
(a) of subdivision 2  to  change  the  beginning  date  of  the  Lebanon
conflict  from June 1, 1983 to August 21, 1982 to match the dates recog-
nized by the Federal Government. This would allow any member of the  New
York  City  Retirement Systems ("NYCRS") who had military service during
the hostilities participated in by the military  forces  of  the  United
States  in Lebanon between August 21, 1982 and May 31, 1983 the opportu-
nity to obtain service credit for that period of time if other  require-
ments to obtain military service credit are met.
  The  Effective  Date  of the proposed legislation would be the date of
enactment.
  The Actuary has presumed that retirees as of  the  enactment  of  this
proposed  legislation would not be eligible to purchase additional mili-
tary service provided by this proposed legislation.
  IMPACT ON BENEFITS: 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.
  The  NYCRS  include:  New  York  City  Employees'  Retirement   System
("NYCERS"),  New  York  City Teachers' Retirement System ("NYCTRS"), New
York City Board of Education Retirement System ("BERS"), New  York  City
Police Pension Fund ("POLICE") and New York Fire Department Pension Fund
("FIRE").
  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.
  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.
  For  illustrative  purposes  only,  a table is included in this Fiscal
Note presenting the estimated financial impact per member assuming  that
the  affected  member purchases service credit for the entire August 21,
1982 to May 31, 1983 period.
  FINANCIAL IMPACT - OVERVIEW: With respect to an individual member, the
additional cost  of  this  proposed  legislation  would  depend  on  the
member's  length  of  service  not  including the military service being

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purchased, the years of military service being  purchased,  age,  salary
history and Plan in which the member participates.
  With  respect  to  employers  participating in the NYCRS, the ultimate
employer cost of this proposed legislation would be  determined  by  the
increase in benefits to be paid, the impact of certain benefits commenc-
ing  earlier,  shorter  working  lifetimes  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  $13,400  for  NYCERS,
$13,200  for NYCTRS, $8,100 for BERS, $22,900 for POLICE and $26,500 for
FIRE per year of service credit purchased as of June 30, 2014.
  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 $2,100 for NYCERS, $2,300 for  NYCTRS,  $1,300  for  BERS,
$3,300  for  POLICE  and  $3,400  for  FIRE  per  year of service credit
purchased as of June 30, 2014.
  Consequently, with respect to the NYCRS, the APV of net future employ-
er contributions would increase by  approximately  $11,300  for  NYCERS,
$10,900  for NYCTRS, $6,800 for BERS, $19,600 for POLICE and $23,100 for
FIRE per year of service credit purchased as of June 30, 2014.
  FINANCIAL IMPACT  -  ADDITIONAL  EMPLOYER  COSTS:  Enactment  of  this
proposed  legislation  would increase employer costs, where such amounts
depend on the number of members affected and upon the amount of military
service being credited as well as other  characteristics  including  the
age, salary history and Plan in which the member participates.
  With  the  respect  to  the  NYCRS,  based  on the Actuary's actuarial
assumptions and methods in effect as of June 30, 2013, the enactment  of
this proposed legislation is estimated to increase annual employer costs
by  approximately  $1,300  for NYCERS, $1,300 for NYCTRS, $800 for BERS,
$2,300 for POLICE and  $2,700  for  FIRE  per  year  of  service  credit
purchased.
  The  real  cost of the enactment of this proposed legislation would be
the additional benefits paid.
  FINANCIAL IMPACT - ADDITIONAL EMPLOYER CONTRIBUTIONS: With respect  to
the  NYCRS,  increases  in employer contributions would depend upon when
the members purchase the military  service  permitted  by  the  proposed
legislation  and  such  service  is credited to their records, but would
ultimately be comparable to the increases in employer costs.
  FINANCIAL IMPACT - SUMMARY: The following table summarizes  the  esti-
mated  financial impact of this proposed legislation on the NYCRS assum-
ing one member in each System is eligible and purchases service for  the
period from August 21, 1982 to May 31, 1983:

        Estimated Financial Impact to Allow Members of the NYCRS
               To Purchase Certain Military Service Credit
                           as of June 30, 2014

                   (Assumes One Member in Each System
                Purchases 0.778 Years{1} of Service Each)

                              ($ Thousands)

                                                            Estimated

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                                      Additional            Additional
                   Additional        APV of Future           Annual
     Retirement     APV of            Employer              Employer
      System      Benefits          Contributions{2}        Costs{3}

      NYCERS         $10.46             $8.79                $1.04
       NYCTRS         10.29              8.50                 1.01
       BERS           6.27               5.27                 0.62
       POLICE         17.79              15.25                1.81
       FIRE           20.64              17.94                2.12

  {1}  .778  years represents the length of time from August 21, 1982 to
May 31, 1983.
  {2} Equals increase in APVB minus increase in  APV  of  future  member
contributions.
  {3}  Estimated Additional Annual 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
legislation and assume  that  any  additional  APV  of  Future  Employer
Contributions,  as they arise, are amortized as actuarial losses over 15
years (14 payments). Estimated Additional Annual Employer  Contributions
would ultimately approximate estimated Additional Annual Employer Costs.
  If  enacted  during the 2014 Legislative Session and if these affected
members and their amount of military service being credited were identi-
fied on or before June 30, 2014,  this  proposed  legislation  would  be
expected to increase employer contributions, if any, to the NYCRS begin-
ning Fiscal Year 2016.
  OTHER  COSTS:  The enactment of this proposed legislation would result
in some administrative expenses for the NYCRS and 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, 2013 (Lag) actuarial valuations of NYCERS, NYCTRS, BERS,
POLICE and FIRE used to  determine  the  Preliminary  Fiscal  Year  2015
employer contributions.
  ACTUARIAL  ASSUMPTIONS AND METHODS: The additional APV of benefits and
employer contributions presented herein have been estimated as  of  June
30,  2014  on  a  hypothetical basis for illustrative purposes with each
eligible member purchasing 0.778 years of military service.
  As benefiting from the provisions  of  this  proposed  legislation  is
dependent  upon  actions  by  Plan members and the timing and amounts of
military service to be purchased are unknown, the financial impact would
likely be realized upon receipt by the Actuary of updated service credit
information.
  Consequently, changes in employer contributions  have  been  estimated
assuming  the increase in the APV of Future Employer Contributions would
be financed over a time period comparable to  that  used  for  actuarial
losses  under  the Entry Age Actuarial Cost Method. Using this approach,
the Additional APV of Future Employer Contributions would  be  amortized
over  a  closed 15-year period (14 payments under One-Year Lag Methodol-
ogy) using level dollar payments.
  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.

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  However,  the  economic  assumptions  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 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 2014 Legislative Session. It is Fiscal  Note  2014-07,  dated
February  12,  2014  prepared  by the Chief Actuary of the New York City
Retirement Systems.