S T A T E   O F   N E W   Y O R K
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                                  7629--A
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 14, 2019
                                ___________
 
 Introduced by M. of A. ABBATE -- read once and referred to the Committee
   on  Governmental  Employees -- recommitted to the Committee on Govern-
   mental Employees in accordance with Assembly Rule 3, sec. 2 -- commit-
   tee discharged, bill amended, ordered reprinted as amended and  recom-
   mitted to said committee

 AN  ACT  to amend the retirement and social security law, in relation to
   retirement benefits for general members in  the  uniformed  correction
   force of the New York city department of correction
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Subdivision d of section 504 of the retirement  and  social
 security  law,  as amended by chapter 18 of the laws of 2012, is amended
 to read as follows:
   d. The early service retirement benefit for  general  members  in  the
 uniformed   correction   force  of  the  New  York  city  department  of
 correction, who are not entitled to an early service retirement  benefit
 pursuant to subdivision c of section five hundred four-a of this article
 or  subdivision  c  of  section  five  hundred four-b of this article or
 subdivision c of section five hundred four-d of  this  article,  or  for
 general  members  in  the  uniformed personnel in institutions under the
 jurisdiction of the department of corrections and community supervision,
 as defined in subdivision i of  section  eighty-nine  of  this  chapter,
 shall  be  a pension equal to one-fiftieth of final average salary times
 years of credited service at the  completion  of  twenty-five  years  of
 service,  [but  not  in excess of fifty percent of final average salary]
 PLUS ONE-SIXTIETH OF  FINAL  AVERAGE  SALARY  TIMES  YEARS  OF  CREDITED
 SERVICE IN EXCESS OF TWENTY-FIVE, provided, however, that the provisions
 of   this  section  shall  not  apply  to  a  New  York  city  uniformed
 correction/sanitation revised plan member.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD04299-08-0

 A. 7629--A                          2
 
   SUMMARY OF BILL: This proposed legislation would amend Retirement  and
 Social  Security Law (RSSL) Section 504 by modifying the service retire-
 ment benefit calculation formula for uniformed employees of the New York
 City Department of Correction (Correction) who are members  of  the  New
 York  City  Employees' Retirement System (NYCERS) and are subject to the
 Early Service Retirement Benefit Plan for General  Members  pursuant  to
 RSSL  Section  504  (CO-25  Plan).  The  CO-25 Plan is limited to Tier 3
 Correction members who joined NYCERS prior to December 19,  1990  (CO-25
 Plan Members).
   Effective Date: Upon enactment.
   IMPACT ON BENEFITS: Currently, upon reaching 25 or more years of cred-
 ited  service,  CO-25  Plan Members are entitled to a service retirement
 pension benefit equal to:
   * 50% of Final Average Salary (FAS).
   Under the proposed legislation, if  enacted,  the  service  retirement
 benefit for CO-25 Plan Members who retire for service under RSSL Section
 504(d)  after  the effective date of the proposed legislation with 25 or
 more years of credited service would be equal to:
   * 50% of FAS for the first 25 years of credited service, plus
   * 1/60th of FAS for each additional year of credited service, or frac-
 tion thereof, exceeding 25 years (if any).
   FINANCIAL IMPACT - PRESENT VALUES: Based on the census data and  actu-
 arial  assumptions  and  methods  herein, the enactment of this proposed
 legislation would increase the Present Value of Future  Benefits  (PVFB)
 by approximately $7.3 million.
   Under  the Entry Age Normal cost method used to determine the employer
 contributions to NYCERS, there would be  an  increase  in  the  Unfunded
 Accrued Liability (UAL) of approximately $7.2 million and an increase in
 the Present Value of future employer Normal Cost of $0.1 million.
   FINANCIAL  IMPACT  - ANNUAL EMPLOYER CONTRIBUTIONS: In accordance with
 Section 13-638.2(k-2) of the Administrative Code of the City of New York
 (ACCNY), new UAL attributable to benefit changes are to be amortized  as
 determined  by the Actuary, but are generally amortized over the remain-
 ing working lifetime of those impacted by the  benefit  changes.  As  of
 June  30, 2019, the remaining working lifetime of the CO-25 Plan Members
 is approximately 3 years.
   For the purposes of this Fiscal Note, the increase in  UAL  was  amor-
 tized  over a 3-year period (2 payments under the One-Year Lag Methodol-
 ogy (OYLM)) using level dollar payments.  This payment plus the increase
 in the Normal Cost results in an increase in  annual  employer  contrib-
 utions of approximately $4.1 million each year.
   CONTRIBUTION  TIMING:  For  the  purposes  of  this Fiscal Note, it is
 assumed that the changes in the PVFB and annual  employer  contributions
 would  be  reflected  for  the first time in the June 30, 2019 actuarial
 valuation of NYCERS. In accordance  with  the  OYLM  used  to  determine
 employer  contributions,  the  increase  in employer contributions would
 first be reflected in Fiscal Year 2021.
   CENSUS DATA: The estimates presented herein are based  on  the  census
 data  used in the Preliminary June 30, 2019 (Lag) actuarial valuation of
 NYCERS to determine the Preliminary Fiscal Year 2021  employer  contrib-
 utions.
   The  55  NYCERS  CO-25 Plan Members as of June 30, 2019 had an average
 age of approximately 56.7 years, average service of  approximately  29.8
 years, and an average salary of approximately $139,900.
   ACTUARIAL  ASSUMPTIONS AND METHODS: The changes in the PVFB and annual
 employer contributions presented herein have been  calculated  based  on

 A. 7629--A                          3
 
 the  actuarial  assumptions  and methods in effect for the June 30, 2019
 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year
 2021 employer contributions of NYCERS with the exception of  the  proba-
 bility  of a CO-25 Plan Member working beyond 25 years of service, which
 was increased to recognize  the  impact  the  proposed  legislation,  if
 enacted, would have on retirement behavior.
   RISK  AND  UNCERTAINTY: The costs presented in this Fiscal Note depend
 highly on the realization of the actuarial assumptions used, as well  as
 certain  demographic  characteristics  of  NYCERS  and  other  exogenous
 factors such as investment, contribution, and  other  risks.  If  actual
 experience  deviates  from actuarial 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.
   Not measured in this Fiscal Note are the following:
   * The initial, additional administrative costs of NYCERS and other New
 York City agencies to implement the proposed legislation.
   *  The  impact  of  this  proposed legislation on Other Postemployment
 Benefit (OPEB) costs.
   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 2020-22 dated April 1,
 2020 was prepared by the Chief Actuary for the New York City  Employees'
 Retirement  System.  This  estimate  is intended for use only during the
 2020 Legislative Session.