Bill Text: NY A07023 | 2023-2024 | General Assembly | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Increases the base benefit amount for computation of pension cost-of-living adjustments.
Spectrum: Slight Partisan Bill (Democrat 7-3)
Status: (Introduced) 2024-03-04 - print number 7023a [A07023 Detail]
Download: New_York-2023-A07023-Introduced.html
Bill Title: Increases the base benefit amount for computation of pension cost-of-living adjustments.
Spectrum: Slight Partisan Bill (Democrat 7-3)
Status: (Introduced) 2024-03-04 - print number 7023a [A07023 Detail]
Download: New_York-2023-A07023-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 7023 2023-2024 Regular Sessions IN ASSEMBLY May 10, 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 and the education law, in relation to increasing the base benefit amount for computation of pension cost-of-living adjustments The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivisions c and d of section 78-a of the retirement and 2 social security law, as added by chapter 125 of the laws of 2000, are 3 amended to read as follows: 4 c. Said cost-of-living adjustment shall be computed on a base benefit 5 amount not to exceed eighteen thousand dollars of the annual retirement 6 allowance defined in subdivision b of this section, except that effec- 7 tive on the first day of September, two thousand twenty-four, the cost- 8 of-living adjustment shall be computed on a base benefit amount not to 9 exceed twenty-one thousand dollars of the annual retirement allowance 10 defined in subdivision b of this section. 11 d. The percentage referred to in this section shall be determined 12 annually by reference to the consumer price index (all urban consumers, 13 CPI-U, U.S. city average, all items, 1982-84=100), published by the 14 United States bureau of labor statistics, for each applicable calendar 15 year. Said percentage shall equal fifty percent of the annual inflation, 16 as determined from the increase in the consumer price index in the one 17 year period ending on the March thirty-first prior to the cost-of-living 18 adjustment effective on the ensuing September first. Said percentage 19 shall then be rounded up to the next higher one-tenth of one percent and 20 shall not exceed three percent nor be less than one percent, except 21 that, commencing the first day of September, two thousand twenty-four, 22 the cost-of-living adjustments paid between the first day of September, 23 two thousand two and the first day of September, two thousand twenty-two 24 shall equal one hundred percent of the annual inflation, as determined EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD09889-02-3A. 7023 2 1 from the increase in the consumer price index in the one year period 2 ending on the March thirty-first prior to the cost-of-living adjustment 3 effective on the ensuing September first. Said percentage shall then be 4 rounded up to the next higher one-tenth of one percent and shall not 5 exceed three percent nor be less than one percent. 6 § 2. Subdivisions c and d of section 378-a of the retirement and 7 social security law, as added by chapter 125 of the laws of 2000, are 8 amended to read as follows: 9 c. Said cost-of-living adjustment shall be computed on a base benefit 10 amount not to exceed eighteen thousand dollars of the annual retirement 11 allowance defined in subdivision b of this section, except that, effec- 12 tive on the first day of September, two thousand twenty-four, the cost- 13 of-living adjustment shall be computed on a base benefit amount not to 14 exceed twenty-one thousand dollars of the annual retirement allowance 15 defined in subdivision b of this section. 16 d. The percentage referred to in this section shall be determined 17 annually by reference to the consumer price index (all urban consumers, 18 CPI-U, U.S. city average, all items, 1982-84=100), published by the 19 United States bureau of labor statistics, for each applicable calendar 20 year. Said percentage shall equal fifty percent of the annual inflation, 21 as determined from the increase in the consumer price index in the one 22 year period ending on the March thirty-first prior to the cost-of-living 23 adjustment effective on the ensuing September first. Said percentage 24 shall then be rounded up to the next higher one-tenth of one percent and 25 shall not exceed three percent nor be less than one percent, except 26 that, commencing the first day of September, two thousand twenty-four, 27 the cost-of-living adjustments paid between the first day of September, 28 two thousand two and the first day of September, two thousand twenty-two 29 shall equal one hundred percent of the annual inflation, as determined 30 from the increase in the consumer price index in the one year period 31 ending on the March thirty-first prior to the cost-of-living adjustment 32 effective on the ensuing September first. Said percentage shall then be 33 rounded up to the next higher one-tenth of one percent and shall not 34 exceed three percent nor be less than one percent. 35 § 3. Subdivisions c and d of section 532-a of the education law, as 36 added by chapter 125 of the laws of 2000, are amended to read as 37 follows: 38 c. Said cost-of-living adjustment shall be computed on a base benefit 39 amount not to exceed eighteen thousand dollars of the annual retirement 40 allowance defined in subdivision b of this section, except that effec- 41 tive on the first day of September, two thousand twenty-four, the cost- 42 of-living adjustment shall be computed on a base benefit amount not to 43 exceed twenty-one thousand dollars of the annual retirement allowance 44 defined in subdivision b of this section. 45 d. The percentage referred to in this section shall be determined 46 annually by reference to the consumer price index (all urban consumers, 47 CPI-U, U.S. city average, all items, 1982-84=100), published by the 48 United States bureau of labor statistics, for each applicable calendar 49 year. Said percentage shall equal fifty percent of the annual inflation, 50 as determined from the increase in the consumer price index in the one 51 year period ending on the March thirty-first prior to the cost-of-living 52 adjustment effective on the ensuing September first. Said percentage 53 shall then be rounded up to the next higher one-tenth of one percent and 54 shall not exceed three percent nor be less than one percent, except 55 that, commencing the first day of September, two thousand twenty-four, 56 the cost-of-living adjustments paid between the first day of September,A. 7023 3 1 two thousand two and the first day of September, two thousand twenty-two 2 shall equal one hundred percent of the annual inflation, as determined 3 from the increase in the consumer price index in the one year period 4 ending on the March thirty-first prior to the cost-of-living adjustment 5 effective on the ensuing September first. Said percentage shall then be 6 rounded up to the next higher one-tenth of one percent and shall not 7 exceed three percent nor be less than one percent. 8 § 4. Notwithstanding any other provision of law to the contrary, none 9 of the provisions of this act shall be subject to section 25 of the 10 retirement and social security law. 11 § 5. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: This bill would provide an increase in the defined benefit cost-of- living adjustment (COLA) for the New York State and Local Retirement System and the New York State Teachers' Retirement System. Starting with a payment in September 2024, the annual COLA will be computed on a base benefit amount not to exceed $21,000. Additionally, the COLA payments made from 2002 to 2022 will be recomputed based on one hundred percent of the annual inflation. Currently, the calculation uses a base benefit not to exceed $18,000 and annual increases based on fifty percent of the annual inflation. Insofar as this bill affects the New York State and Local Employees' Retirement System (NYSLERS), the increased costs would be borne entirely by the State of New York and the local participating employers in the NYSLERS. If this bill were enacted during the 2023 legislative session, the increase in the present value of benefits would be approximately $14.2 billion. NYSLERS Increase in present Increase in future value benefits contributions Tiers 1 - 5 $14.1 billion $8.4 billion Tier 6 $0.1 billion $5.8 billion Total $14.2 billion $14.2 billion In the NYSLERS, this benefit improvement will be funded by increasing the billing rates charged annually to cover both retrospective and prospective benefit increases. The annual contribution required of all participating employers in the NYSLERS is 5.2% of billable salary, or approximately $639 million to the State of New York and approximately $928 million to the local participating employers in the fiscal year ending March 31, 2025. This permanent annual cost will vary in subse- quent billing cycles with changes in the billing rate and salary of the affected members. Insofar as this bill affects the New York State and Local Police and Fire Retirement System (NYSLPFRS), the increased costs would be shared by the State of New York and the local participating employers in the NYSLPFRS. If this bill were enacted during the 2023 legislative session, the increase in the present value of benefits would be approximately $1.1 billion. NYSLPFRS Increase in present Increase in future value benefits contributions Tiers 1 - 5 $1.1 billion $0.6 billion Tier 6 $0.02 billion $0.5 billion Total $1.1 billion $1.1 billion In the NYSLPFRS, this benefit improvement will be funded by increasing the billing rates charged annually to cover both retrospective andA. 7023 4 prospective benefit increases. The annual contribution required of all participating employers in the NYSLPFRS is 2.6% of billable salary, or approximately $22 million to the State of New York and approximately $88 million to the local participating employers in the fiscal year ending March 31, 2025. This permanent annual cost will vary in subsequent bill- ing cycles with changes in the billing rate and salary of the affected members. Further, we anticipate significant administrative costs to implement the provisions of this legislation. Summary of relevant resources: Membership data as of March 31, 2022 was used in measuring the impact of the proposed change, the same data used in the April 1, 2022 actuari- al valuation. Distributions and other statistics can be found in the 2022 Report of the Actuary and the 2022 Annual Comprehensive Financial Report. The actuarial assumptions and methods used are described in the 2020, 2021, and 2022 Annual Report to the Comptroller on Actuarial Assump- tions, and the Codes, Rules and Regulations of the State of New York: Audit and Control. The Market Assets and GASB Disclosures are found in the March 31, 2022 New York State and Local Retirement System Financial Statements and Supplementary Information. I am a member of the American Academy of Actuaries and meet the Quali- fication Standards to render the actuarial opinion contained herein. This fiscal note does not constitute a legal opinion on the viability of the proposed change nor is it intended to serve as a substitute for the professional judgment of an attorney. This estimate, dated April 11, 2023, and intended for use only during the 2023 Legislative Session, is Fiscal Note No. 2023-122, prepared by the Actuary for the New York State and Local Retirement System.
