Senate Bill S6571B

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6571
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                               June 5, 2017
                                ___________
 
 Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the retirement and social security law, in  relation  to
   increasing lump sum payments
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. Paragraph e of subdivision 2 of section 1100 of the retire-
 ment and social security law, as added by chapter 523  of  the  laws  of
 2013, is amended to read as follows:
   e.  Any member who files for retirement after being eligible to retire
 for five years may elect to receive a [twenty-five] THIRTY-FIVE  percent
 lump  sum  payment  of the actuarial equivalent of his or her retirement
 allowance at the time of retirement.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, section 50:
   This bill would allow larger lump sum payments to be  made  under  the
 Partial Lump Sum (PLS) program for certain members of the New York State
 and  Local  Police and Fire Retirement System and the New York State and
 Local Employees' Retirement System.  CURRENTLY, members who are eligible
 for the PLS program and who file  for  service  retirement  after  being
 eligible  to  retire  for 5 or more years may elect to receive a partial
 lump sum payment of up to 25% of the present value of their  actuarially
 determined  retirement  allowance (their "reserve") at retirement, and a
 smaller annual retirement allowance thereafter.    THIS  PROPOSAL  would
 allow  a member who files for service retirement after being eligible to
 retire for 5 or more years to be eligible to receive a partial lump  sum
 of up to 35% of their reserve in exchange for a reduction in their annu-
 al  retirement  allowance  of  up  to 35% thereafter. For example, a new
 retiree with an initial annual pension of $100,000 could have a  reserve
 of  approximately  $1.2  million,  and  could  receive  a PLS payment of
 $420,000 and a reduced annual pension of $65,000.

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

                                                            LBD11770-02-7

 S. 6571                             2
 
   If this bill is enacted, there would be administrative  costs  associ-
 ated with redesigned estimate and option forms. There would not be costs
 associated  with  the  lump  sum payment options since payments would be
 determined on an actuarially equivalent basis.
   However,  the  ratcheting  upward  of  the maximum lump sum benefit is
 eroding the original intent of the pension plan, first presented in  the
 March  30,  1920  Report  of the Commission on Pensions, namely, that "a
 satisfactory pension plan must provide as a  minimum,  a  superannuation
 benefit", which is defined as a LIFETIME MONTHLY PAYMENT made to someone
 who is retired from work.
   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, 2016  actuarial  valu-
 ation.    Distributions  and  other  statistics can be found in the 2016
 Report of the  Actuary  and  the  2016  Comprehensive  Annual  Financial
 Report.
   The  actuarial  assumptions and methods used are described in the 2015
 and 2016 Annual Report to the Comptroller on Actuarial Assumptions,  and
 the  Codes  Rules  and  Regulations  of the State of New York: Audit and
 Control.
   The Market Assets and GASB Disclosures are found in the March 31, 2016
 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  May 24, 2017, and intended for use only during
 the 2017 Legislative Session, is Fiscal Note No. 2017-101,  prepared  by
 the Actuary for the New York State and Local Retirement System.

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  6571--A
 
                        2017-2018 Regular Sessions
 
                             I N  S E N A T E
 
                               June 5, 2017
                                ___________
 
 Introduced  by  Sen.  GOLDEN -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules  --  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 committee

 AN  ACT  to amend the retirement and social security law, in relation to
   increasing lump sum payments
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Paragraph e of subdivision 2 of section 1100 of the retire-
 ment  and  social  security  law, as added by chapter 523 of the laws of
 2013, is amended to read as follows:
   e. Any member who files for retirement after being eligible to  retire
 for  five years may elect to receive a [twenty-five] THIRTY-FIVE percent
 lump sum payment of the actuarial equivalent of his  or  her  retirement
 allowance at the time of retirement.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, section 50:
   This  bill  would  allow larger lump sum payments to be made under the
 Partial Lump Sum (PLS) program for certain members of the New York State
 and Local Police and Fire Retirement System and the New York  State  and
 Local Employees' Retirement System.  CURRENTLY, members who are eligible
 for  the  PLS  program  and  who file for service retirement after being
 eligible to retire for 5 or more years may elect to  receive  a  partial
 lump  sum payment of up to 25% of the present value of their actuarially
 determined retirement allowance (their "reserve") at retirement,  and  a
 smaller  annual  retirement  allowance thereafter.   THIS PROPOSAL would
 allow a member who files for service retirement after being eligible  to
 retire  for 5 or more years to be eligible to receive a partial lump sum
 of up to 35% of their reserve in exchange for a reduction in their annu-
 al retirement allowance of up to 35%  thereafter.  For  example,  a  new
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD11770-03-8

 S. 6571--A                          2
 
 retiree  with an initial annual pension of $100,000 could have a reserve
 of approximately $1.2 million,  and  could  receive  a  PLS  payment  of
 $420,000 and a reduced annual pension of $65,000.
   If  this  bill is enacted, there would be administrative costs associ-
 ated with redesigned estimate and option forms. There would not be costs
 associated with the lump sum payment options  since  payments  would  be
 determined on an actuarially equivalent basis.
   However,  the  ratcheting  upward  of  the maximum lump sum benefit is
 eroding the original intent of the pension plan, first presented in  the
 March  30,  1920  Report  of the Commission on Pensions, namely, that "a
 satisfactory pension plan must provide as a  minimum,  a  superannuation
 benefit", which is defined as a LIFETIME MONTHLY PAYMENT made to someone
 who is retired from work.
   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, 2017  actuarial  valu-
 ation.    Distributions  and  other  statistics can be found in the 2017
 Report of the  Actuary  and  the  2017  Comprehensive  Annual  Financial
 Report.
   The  actuarial assumptions and methods used are described in the 2015,
 2016, and 2017 Annual Report to the  Comptroller  on  Actuarial  Assump-
 tions,  and  the  Codes  Rules and Regulations of the State of New York:
 Audit and Control.
   The Market Assets and GASB Disclosures are found in the March 31, 2017
 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 January 4, 2018, and intended for use only during
 the  2018  Legislative  Session, is Fiscal Note No. 2018-27, prepared by
 the Actuary for the New York State and Local Retirement System.