Senate Bill S5585B

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5585
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                May 8, 2019
                                ___________
 
 Introduced by Sen. GOUNARDES -- read twice and ordered printed, and when
   printed to be committed to the Committee on Civil Service and Pensions
 
 AN  ACT  to amend the retirement and social security law, in relation to
   determination of salary base for members of the city of New York  fire
   department pension fund

   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 443 of the retirement and social  security  law  is
 amended by adding a new subdivision h to read as follows:
   H.  NOTWITHSTANDING ANY GENERAL, SPECIAL OR LOCAL LAW, CHARTER, ADMIN-
 ISTRATIVE CODE, AGREEMENT, RESOLUTION  OR  RULE  OR  REGULATION  TO  THE
 CONTRARY,  THE  SALARY  BASE  FOR  MEMBERS  OF THE CITY OF NEW YORK FIRE
 DEPARTMENT PENSION FUND WHOSE EMPLOYMENT WITH THE FIRE DEPARTMENT OF THE
 CITY OF NEW YORK COMMENCED ON OR AFTER THE FIRST OF JULY,  TWO  THOUSAND
 TO  WHOM  THIS ARTICLE OTHERWISE APPLIES SHALL BE DETERMINED IN THE SAME
 MANNER AS THE SALARY BASE FOR MEMBERS OF  THE  CITY  OF  NEW  YORK  FIRE
 DEPARTMENT PENSION FUND WHOSE EMPLOYMENT WITH THE FIRE DEPARTMENT OF THE
 CITY OF NEW YORK COMMENCED BEFORE THE FIRST OF JULY, TWO THOUSAND.
   § 2. This act shall take effect immediately and shall apply to members
 of  the  city of New York fire department pension fund who retire on and
 after such effective date.
 
 
 
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11504-02-9



              

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5585--A
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                                May 8, 2019
                                ___________
 
 Introduced by Sen. GOUNARDES -- 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
   determination  of salary base for members of the city of New York fire
   department pension fund
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Section  443 of the retirement and social security law is
 amended by adding a new subdivision h to read as follows:
   H. NOTWITHSTANDING ANY GENERAL, SPECIAL OR LOCAL LAW, CHARTER,  ADMIN-
 ISTRATIVE  CODE,  AGREEMENT,  RESOLUTION  OR  RULE  OR REGULATION TO THE
 CONTRARY, THE SALARY BASE FOR MEMBERS OF  THE  CITY  OF  NEW  YORK  FIRE
 DEPARTMENT PENSION FUND WHOSE EMPLOYMENT WITH THE FIRE DEPARTMENT OF THE
 CITY  OF  NEW YORK COMMENCED ON OR AFTER THE FIRST OF JULY, TWO THOUSAND
 TO WHOM THIS ARTICLE OTHERWISE APPLIES SHALL BE DETERMINED IN  THE  SAME
 MANNER  AS  THE  SALARY  BASE  FOR  MEMBERS OF THE CITY OF NEW YORK FIRE
 DEPARTMENT PENSION FUND WHOSE EMPLOYMENT WITH THE FIRE DEPARTMENT OF THE
 CITY OF NEW YORK COMMENCED BEFORE THE FIRST OF JULY, TWO THOUSAND.
   § 2. This act shall take effect immediately and shall apply to members
 of the city of New York fire department pension fund who retire  on  and
 after such effective date.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY  OF BILL: This proposed legislation would amend Section 443 of
 the Retirement and Social Security Law (RSSL) to change the salary  base
 for Tier 2 members of the New York City Fire Pension Fund (FIRE) who are
 hired  on  or  after July 1, 2000 to a salary base used for such members
 who joined prior to July 1, 2000.
   Effective Date: Upon enactment.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11504-03-9
              

 S. 5585--A                          2
 
   IMPACT ON BENEFITS: Currently, Tier 2 FIRE plan benefits are primarily
 derived from a salary base. For Tier 2 FIRE members hired prior to  July
 1,  2000  (original  Tier  2  members),  the salary base is equal to the
 greater of
   (1) the pensionable earnings in the final 12 months of service, or
   (2)  the  average pensionable earnings earned in any consecutive three
 years of service.
   Pensionable earnings in the final 12 months of service may not  exceed
 120% of the previous 12 months' pensionable earnings. If the salary base
 is  based  on  the  highest  three  consecutive  years, no single year's
 pensionable earnings may exceed 120% of the average of the two  previous
 years' pensionable earnings.
   For  Tier  2  Fire  members hired on or after July 1, 2000 (new Tier 2
 members), the salary base is equal to the pensionable earnings earned in
 the final 12 months of service only.
   Under the proposed legislation, if enacted, the salary base  shall  be
 determined  the  same  for Tier 2 Fire members hired on or after July 1,
 2000 as it is for Tier 2 members hired prior to July 1, 2000.
   FINANCIAL IMPACT - PRESENT VALUES: Based on the actuarial  assumptions
 and methods described herein, the enactment of this proposed legislation
 would increase the Present Value of Future Benefits (PVFB) and the Pres-
 ent  Value  of  future  employer  contributions  by  approximately  $3.4
 million.
   Under the Entry Age Normal cost method used to determine the  employer
 contributions  to  FIRE,  there  would  be  an  increase in the Unfunded
 Accrued Liability (UAL) of approximately $0.6 million and an increase in
 the Present Value of future employer Normal Cost of $2.8 million.
   FINANCIAL IMPACT - ANNUAL EMPLOYER CONTRIBUTIONS: In  accordance  with
 Administrative   Code   of   the   City  of  New  York  (ACCNY)  Section
 13-638.2(k-2), new UAL attributable to benefit changes are to  be  amor-
 tized  as  determined  by  the  Actuary but generally over the remaining
 working lifetime of those impacted by the benefit changes.  As  of  June
 30,  2018, the remaining working lifetime of the Tier 2 members hired on
 or after July 1, 2000 is approximately 13 years.
   For the purposes of this Fiscal Note, the increase in  UAL  was  amor-
 tized  over a 13-year period (12 payments under the One-Year Lag Method-
 ology (OYLM))  using  level  dollar  payments.  This  payment  plus  the
 increase  in  the  Normal Cost results in an increase in annual employer
 contributions of approximately $380,000 each year.
   OTHER COSTS: Not measured in this Fiscal Note are the following:
   * The initial, additional administrative costs of FIRE and  other  New
 York City agencies to implement the proposed legislation.
   *  Pension  costs  for  Tier 2 members of New York City Police Pension
 Fund hired on or after July 1, 2000 who currently have the same  benefit
 formula  as  the  Fire Tier 2 members hired on or after July 1, 2000 and
 who may obtain the same benefit improvement through parity  via  collec-
 tive bargaining.
   *  The  impact  of  this  proposed legislation on Other Postemployment
 Benefit (OPEB) costs.
   CONTRIBUTION TIMING: For the purposes  of  this  Fiscal  Note,  it  is
 assumed  that  the  changes  in  the  Present  Value  of future employer
 contributions and annual employer contributions would be  reflected  for
 the  first  time  in  the  June 30, 2018 actuarial valuation of FIRE. In
 accordance with the OYLM used to determine employer  contributions,  the
 increase  in  employer  contributions would first be reflected in Fiscal
 Year 2020.

 S. 5585--A                          3
 
   CENSUS DATA: The estimates presented herein are based  on  the  census
 data  used in the Preliminary June 30, 2018 (Lag) actuarial valuation of
 FIRE to determine the Preliminary Fiscal  Year  2020  employer  contrib-
 utions.
   There  are  5,417 active Tier 2 Fire members hired on or after July 1,
 2000 as of June 30, 2018 and they have an average age  of  approximately
 40.3  years, average service of approximately 14.4 years, and an average
 salary of approximately $127,100.
   ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
 future  employer  contributions  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  contrib-
 utions of FIRE.
   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 2019-24 dated May 24,
 2019 was prepared by the Chief  Actuary  for  the  New  York  City  Fire
 Pension  Fund.  This  estimate  is intended for use only during the 2019
 Legislative Session.