S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   10415
 
                           I N  A S S E M B L Y
 
                               May 13, 2022
                                ___________
 
 Introduced  by  COMMITTEE ON RULES -- (at request of M. of A. Abbate) --
   read once and referred to the Committee on Governmental Employees
 
 AN ACT to amend the retirement and social security law, in  relation  to
   additional pension benefits for police/fire members
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. The retirement and social security law is amended by adding
 a new section 505-a to read as follows:
   §  505-A.  ADDITIONAL  PENSION  BENEFIT   FOR   POLICE/FIRE   MEMBERS.
 POLICE/FIRE  MEMBERS SHALL, UPON RETIREMENT, RECEIVE FOR EACH ADDITIONAL
 YEAR OF SERVICE OR FRACTION THEREOF BEYOND  NORMAL  RETIREMENT  AGE,  IN
 ADDITION  TO  THE  BENEFITS  PROVIDED  IN  SUBDIVISION A OF SECTION FIVE
 HUNDRED FIVE OF THIS ARTICLE, OR SUBDIVISION C OF SECTION  FIVE  HUNDRED
 SEVEN OF THIS ARTICLE, A PENSION OF ONE-SIXTIETH OF AVERAGE ANNUAL EARN-
 INGS  FROM  THE DATE OF ELIGIBILITY FOR NORMAL SERVICE RETIREMENT TO THE
 ACTUAL DATE OF RETIREMENT.   SUCH PENSION SHALL  BE  SUBJECT  TO  ANNUAL
 ESCALATION PURSUANT TO SECTION FIVE HUNDRED TEN OF THIS ARTICLE.
   § 2. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY  OF  BILL:  This  proposed legislation would add a new Section
 505-a to the Retirement and Social Security Law  (RSSL)  to  provide  an
 additional  benefit  of  1/60th  of  average annual earnings, subject to
 applicable escalation, for each additional year of credited service,  or
 fraction  thereof, beyond 22 years of service for normal service retire-
 ment and Accident  Disability  Retirement  (ADR)  benefits  for  Tier  3
 Original,  Revised/Modified,  and Enhanced plan members (Tier 3 members)
 of the New York City Police Pension Fund (POLICE) and the New York  City
 Fire Pension Fund (FIRE).
   Effective Date: Upon enactment.
   IMPACT ON BENEFITS: Currently, upon reaching 22 or more years of cred-
 ited  service, the Tier 3 normal service retirement and non-Enhanced ADR
 benefit is equal to:
   * 50% of Final Average Salary (FAS),
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD14663-02-2
              

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   * Reduced by 50% of the Primary Social  Security  benefit  (determined
 under RSSL Section 511), plus
   * Annual escalation as provided in RSSL Section 510.
   where FAS is defined as:
   * 3-Year FAS (FAS 3) for Original Tier 3 Members, and
   * 5-Year FAS (FAS 5) for Revised/Modified Plan Members.
   The current Enhanced ADR benefit is equal to:
   * 75% of FAS 5 subject to Cost-of-Living Adjustment (COLA) pursuant to
 Administrative Code of the City of New York (ACCNY) Section 13-696.
   Under the proposed legislation, if enacted, the retirement benefit for
 Tier  3  members  who  retire  for service or non-Enhanced ADR after the
 effective date of the proposed legislation with  22  or  more  years  of
 credited service would be equal to:
   * 50% of FAS for the first 22 years of credited service, plus
   *  1/60th of average annual earnings for each additional year of cred-
 ited service, or fraction thereof, exceeding 22 years (if any),
   * Reduced by 50% of the Primary Social  Security  benefit  (determined
 under RSSL Section 511), plus
   * Annual escalation as provided in RSSL Section 510.
   where FAS is defined as:
   * 3-Year FAS (FAS 3) for Original Tier 3 Members, and
   * 5-Year FAS (FAS 5) for Revised/Modified Plan Members.
   Under  the  proposed legislation, if enacted, the Enhanced ADR benefit
 for Tier 3 members who retire with 22 or more years of credited  service
 after the effective date of the proposed legislation would be equal to:
   * 75% of FAS 5 subject to COLA pursuant to ACCNY Section 13-696, plus
   *  1/60th of average annual earnings for each additional year of cred-
 ited service, or fraction thereof, exceeding 22 years (if any),  subject
 to annual escalation as provided in RSSL Section 510.
   FINANCIAL  IMPACT - SUMMARY: The estimated financial impact of provid-
 ing an additional 1/60th of average annual earnings for  service  beyond
 22  years  of service as described above is an increase in Present Value
 of Future Benefits (PVFB), and an  increase  in  the  Present  Value  of
 future employer contributions.
   In  the  initial  year,  the Present Value of future employer contrib-
 utions would increase by approximately $1,020.3 million for  POLICE  and
 $289.8  million for FIRE, for a total increase of approximately $1,310.1
 million.
   The financial impact will increase as the impacted populations (Tier 3
 members of POLICE and FIRE) increase over  time.  The  estimate  of  the
 increase  in annual employer contributions for Fiscal Years 2023 through
 2027 based on the applicable actuarial  assumptions  and  methods  noted
 herein, are shown in the table below.
 
              Increase in Employer Contributions ($ Millions)
      Fiscal Year     POLICE    FIRE      TOTAL
       2023           $67.4     $18.0     $85.4
       2024           $72.4     $19.8     $92.2
       2025           $77.5     $21.9     $99.4
       2026           $82.6     $23.8     $106.4
       2027           $89.5     $26.0     $115.5

   In  accordance  with ACCNY Section 13-638.2(k-2), new Unfunded Accrued
 Liability (UAL) attributable to benefit changes are to be  amortized  as
 determined by the Actuary but are generally amortized over the remaining
 working  lifetime  of  those impacted by the benefit changes. As of June
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 30, 2021, the remaining working lifetime of POLICE  Tier  3  members  is
 approximately  18  years  and  FIRE  Tier  3 members is approximately 20
 years.
   For  the  purposes  of  this  Fiscal Note, the increase in the UAL for
 POLICE was amortized over an 18-year period (17 payments under the  One-
 Year Lag Methodology (OYLM)) using level dollar payments and the UAL for
 FIRE  was  amortized  over a 20-year period (19 payments under the OYLM)
 using level dollar payments.
   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 Final June 30, 2021 actuarial valuations of POLICE
 and  FIRE.  In  accordance  with  the  OYLM  used  to determine employer
 contributions, the increase in employer  contributions  would  first  be
 reflected in Fiscal Year 2023.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2021 (Lag) actuarial valuations of
 POLICE and FIRE to determine the Preliminary Fiscal Year  2023  employer
 contributions.
   There  are  17,963 active Tier 3 members of POLICE as of June 30, 2021
 and they have an  average  age  of  approximately  31.8  years,  average
 service  of  approximately  5.3 years, and an average salary of approxi-
 mately $97,600.
   There are 3,973 active Tier 3 members of FIRE as of June 30, 2021  and
 they have an average age of approximately 32.4 years, average service of
 approximately 4.9 years, and an average salary of approximately $99,200.
   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 Preliminary June 30, 2021 (Lag)  actuarial
 valuations  used  to determine the Preliminary Fiscal Year 2023 employer
 contributions of POLICE and FIRE with the exception of  the  probability
 of  Tier  3  Police and Fire members working beyond 22 years of service,
 which was increased to recognize the impact the proposed legislation, if
 enacted, would have on retirement behavior.
   New entrants were projected to replace the members expected  to  leave
 the active population to maintain a steady-state population. New entrant
 demographics  and future salary increases are consistent with those used
 in projections for the New York City Office of Management and Budget  in
 April 2022 (Preliminary Projections).
   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 POLICE and FIRE, and other exoge-
 nous factors such as investment, contribution, and other risks. If actu-
 al  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 POLICE, FIRE, and
 other New York City agencies to implement the proposed legislation.
   * Pension costs for:
   * Future members of POLICE and FIRE hired on or after 7/1/2025.
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   * Current and future members of New York  City  Employees'  Retirement
 System  who  currently  have the same benefit formula as POLICE and FIRE
 Tier 3 members and who may obtain the same benefit improvement.
   *  The  impact  of  this  proposed legislation on Other Postemployment
 Benefit (OPEB) costs.
   STATEMENT OF ACTUARIAL OPINION: I, Michael J. Samet,  am  the  Interim
 Chief  Actuary  for,  and  independent  of, the New York City Retirement
 Systems and Pension Funds. 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. 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 2022-46 dated May 9, 2022
 was  prepared  by the Interim Chief Actuary for the New York City Police
 Pension Fund and the New York City Fire Pension Fund. This  estimate  is
 intended for use only during the 2022 Legislative Session.