S T A T E O F N E W Y O R K
________________________________________________________________________
5571
2023-2024 Regular Sessions
I N S E N A T E
March 8, 2023
___________
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 chapter 540 of the laws of 2021 amending the retirement
and social security law relating to determination of salary base for
members of the city of New York fire department pension fund, in
relation to the application thereof
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Section 2 of chapter 540 of the laws of 2021 amending the
retirement and social security law relating to determination of salary
base for members of the city of New York fire department pension fund,
is amended to read as follows:
§ 2. This act shall take effect immediately and shall apply to members
of the city of New York fire department pension fund who retire OR
RETIRED on and after [such effective date] JULY 1, 2000.
§ 2. This act shall take effect immediately.
FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
SUMMARY OF BILL: This proposed legislation would amend Chapter 540 of
the Laws of 2021 (Chapter 540) to extend the benefits of such chapter
law to members who retired prior to the effective date of Chapter 540
(i.e., October 29, 2021).
Effective Date: Upon enactment.
BACKGROUND: Prior to the passage of Chapter 540, the salary base use
to calculate pension benefits for Tier 2 members of the New York Fire
Pension Fund (FIRE) hired on or after July 1, 2000, was equal to the
pensionable earnings earned in the final 12 months of service only.
Chapter 540 revised the salary base for such members to equal the great-
er 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.
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
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Chapter 540 did not apply to members who had already retired. Under
this proposed legislation, the pension benefits for such Tier 2 FIRE
members would be recalculated to the extent that the three-year average
referenced above is larger than the pensionable earnings in the final 12
months of service.
For the purposes of this Fiscal Note, it has been assumed that any
increased benefits resulting from this proposed legislation would be
applied retroactively to the member's retirement date.
FINANCIAL IMPACT - PRESENT VALUES: Based on the census data and the
actuarial assumptions and methods described herein, the enactment of
this proposed legislation would result in an increase in the Present
Value of Future Benefits (PVFB) and the present value of future employer
contributions of approximately $41.3 million.
FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: The enactment of this
proposed legislation would result in an increase in Fiscal Year 2024
employer contributions of approximately $45.7 million.
New UAL attributable to benefit changes are generally amortized over
the remaining working lifetime of those impacted by the benefit changes.
For the purposes of this Fiscal Note, since those that would benefit are
retired, and therefore have no remaining working lifetime, the entire
increase in PVFB would be recognized immediately.
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. Since actual
historical salary data was unavailable, historical valuation data was
used to approximate the impact of recalculating members' benefits.
The 386 retired members and beneficiaries assumed to benefit from this
proposed legislation as of June 30, 2022 had an average age of approxi-
mately 46.1 years, and have been retired an average of 3.6 years. The
average annual benefit increase resulting from this proposed legislation
is approximately $6,500.
ACTUARIAL ASSUMPTIONS AND METHODS: The estimates presented herein have
been calculated based on the actuarial assumptions and methods to be
used for the Preliminary Fiscal Year 2024 employer contributions of
FIRE.
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 additional administrative
costs to implement the proposed legislation (e.g., recalculating
pensioner benefits).
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
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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 2023-07 dated March 3,
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.