S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7698
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               June 6, 2023
                                ___________
 
 Introduced  by  M.  of A. PHEFFER AMATO -- read once and referred to the
   Committee on Governmental Employees
 
 AN ACT to amend the retirement and social security law, in  relation  to
   affording  certain  police/fire  members  who  are members of the fire
   department pension fund to continue in service past normal  retirement
   age  with  an  additional  pension benefit for each year of additional
   service
 
   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 503-a to read as follows:
   §  503-A. EXTRA PENSION SERVICE CREDITS. NOTWITHSTANDING ANY PROVISION
 OF LAW TO THE CONTRARY, A POLICE/FIRE MEMBER WHO IS A MEMBER OF THE  NEW
 YORK  CITY FIRE DEPARTMENT PENSION FUND MAY CONTINUE IN SERVICE PAST THE
 DATE THAT HE OR SHE ATTAINS NORMAL RETIREMENT AGE.  IN  SUCH  EVENT  AND
 UPON  HIS  OR  HER  RETIREMENT  FOR ANY CAUSE WHATSOEVER, THERE SHALL BE
 ADDED TO HIS OR HER ANNUAL PENSION TO WHICH HE OR SHE SHALL UPON HIS  OR
 HER  RETIREMENT BE ENTITLED AN ADDITIONAL AMOUNT COMPUTED AT THE RATE OF
 ONE-FORTIETH OF HIS OR HER FINAL SALARY FOR EACH YEAR OF SUCH ADDITIONAL
 SERVICE.
   § 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
 503-a  to  the  Retirement  and Social Security Law (RSSL) to provide an
 additional 1/40th of "final salary" benefit, subject to applicable esca-
 lation, for each additional year of credited service, or fraction there-
 of, beyond 22 years of  service  for  Tier  3  Original,  Modified,  and
 Enhanced plan members (Tier 3 members) of 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.
                                                            LBD10130-02-3
 A. 7698                             2
 
   * 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:
   * Three-Year FAS (FAS 3) for Original Tier 3 Members, and
   * Five-Year FAS (FAS 5) for 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
   * 1/40th of Final Salary for each additional year of credited 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:
   * Three-Year FAS (FAS 3) for Original Tier 3 Members, and
   * Five-Year FAS (FAS 5) for Modified Plan Members.
   and where Final Salary is interpreted to mean the  pensionable  salary
 for  each  additional  year  of  credited  service, or fraction thereof,
 exceeding 22 years.
   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
   * 1/40th of Final Salary for each additional year of credited service,
 or fraction thereof, exceeding 22 years  (if  any),  subject  to  annual
 escalation as provided in RSSL Section 510.
   FINANCIAL  IMPACT:  Based on the census data and the actuarial assump-
 tions and methods described  herein,  the  enactment  of  this  proposed
 legislation  would result in an initial increase in the present value of
 future employer contributions of approximately $520.2 million.
   The  financial  impact  will  increase  as  the  impacted   population
 increases  over  time.  The  estimate of the increase in annual employer
 contributions for Fiscal Years 2024 through 2028 are shown in the  table
 below.
 
                                    Increase in Employer
                  Fiscal                Contributions
                   Year                 ($ Millions)
 
                   2024                     $34.1
                   2025                     $37.7
                   2026                     $41.5
                   2027                     $45.2
                   2028                     $49.2
 
   New  Unfunded  Accrued Liability (UAL) attributable to benefit changes
 are generally amortized over the remaining  working  lifetime  of  those
 impacted by the benefit changes. The remaining working lifetime for this
 group  is  approximately  19 years and the increase in UAL was therefore
 A. 7698                             3
 
 amortized over a 19-year period (18  payments  under  the  One-Year  Lag
 Methodology) using level dollar payments.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the June 30, 2022 actuarial valuation of FIRE to  determine
 the Preliminary Fiscal Year 2024 employer contributions.
   There  are 4,469 active Tier 3 members of FIRE as of June 30, 2022 and
 they have an average age of approximately 32.9 years, average service of
 approximately  5.2  years,  and  an  average  salary  of   approximately
 $106,300.
   ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have
 been  calculated based on the actuarial assumptions and methods used for
 the Preliminary Fiscal Year 2024 employer contributions of FIRE with the
 exception of the probability of Tier 3 members working beyond  22  years
 of  service,  which  was  increased to recognize the impact the proposed
 legislation 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 were developed based on data for recent new hires and actu-
 arial judgement.
   For  the  purposes of this Fiscal Note, it is assumed that the changes
 would be reflected for the first time in the  June  30,  2022  actuarial
 valuation  of  FIRE  used to determine employer contributions for Fiscal
 Year 2024.
   RISK AND UNCERTAINTY: The costs presented in this Fiscal  Note  depend
 highly  on the realization of the actuarial assumptions used, demograph-
 ics of the impacted population, and other factors  such  as  investment,
 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.
   Not measured in this Fiscal Note are the following:
   *  The  initial  additional  administrative  costs  to  implement  the
 proposed legislation.
   * Pension costs for future members of FIRE hired on or after 7/1/2026.
   *  The  impact  of  this  proposed legislation on Other Postemployment
 Benefit costs.
   * Cost analyses relating  to  provisions  contained  in  RSSL  Section
 500(c).
   STATEMENT  OF  ACTUARIAL  OPINION:  I, Marek Tyszkiewicz, am the Chief
 Actuary for, and independent of, the New York  City  Retirement  Systems
 and  Pension  Funds. I am an Associate of the Society of Actuaries and a
 Member of the American Academy of Actuaries. I am a member of NYCERS but
 do not believe it impairs my objectivity and 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 2023-57 dated May 23,
 2023 was prepared by the Chief  Actuary  for  the  New  York  City  Fire
 Pension  Fund.  This  estimate  is intended for use only during the 2023
 Legislative Session.