Bill Text: NY S05745 | 2013-2014 | General Assembly | Amended


Bill Title: Provides credit to members of public retirement systems of the state for military service in certain hostilities in Afghanistan.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2014-04-14 - PRINT NUMBER 5745B [S05745 Detail]

Download: New_York-2013-S05745-Amended.html
                           S T A T E   O F   N E W   Y O R K
       ________________________________________________________________________
                                        5745--B
                              2013-2014 Regular Sessions
                                   I N  S E N A T E
                                     June 11, 2013
                                      ___________
       Introduced  by  Sen.  BALL  --  read twice and ordered printed, and when
         printed to be committed to the Committee on Veterans, Homeland Securi-
         ty and Military Affairs -- committee discharged, bill amended, ordered
         reprinted as amended and recommitted to said committee --  recommitted
         to  the  Committee on Veterans, Homeland Security and Military Affairs
         in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill
         amended, ordered reprinted as amended and recommitted to said  commit-
         tee
       AN  ACT  to amend the retirement and social security law, in relation to
         providing credit to members of public retirement systems of the  state
         for certain military service
         THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
       BLY, DO ENACT AS FOLLOWS:
    1    Section 1. Paragraph (d) of subdivision  2  of  section  1000  of  the
    2  retirement  and social security law, as added by chapter 548 of the laws
    3  of 2000, is amended to read  as follows:
    4    (d) hostilities participated in by the military forces of  the  United
    5  States,  from  the second day of August, nineteen hundred ninety, to the
    6  end of such hostilities in case of a veteran who served in  the  theater
    7  of   operations  including  Iraq,  Kuwait,  Saudi  Arabia,  AFGHANISTAN,
    8  Bahrain, Qatar, the United Arab Emirates, Oman, the Gulf  of  Aden,  the
    9  Gulf  of  Oman,  the  Persian  Gulf, the Red Sea, and the airspace above
   10  these locations.
   11    S 2. Notwithstanding any other provision of law to the contrary,  none
   12  of  the  provisions  of  this  act shall be subject to section 25 of the
   13  retirement and social security law.
   14    S 3. This act shall take effect immediately and  shall  be  deemed  to
   15  have been in full force and effect on and after December 21, 1998.
         FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
         This  bill  would  extend the benefits of Chapter 548, Laws of 2000 to
       members of public retirement systems in New York State who rendered  any
        EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD01509-10-4
       S. 5745--B                          2
       military  service  during the period of conflict in Afghanistan and were
       assigned to the theater of operations. The total service credit  granted
       for  any military service shall not exceed three (3) years. Members must
       have  at  least  five  years of credited service (not including military
       service). Tier 1-5 members and retirees would  be  required  to  make  a
       payment  of  three percent of their most recent compensation per year of
       additional service credit granted by this bill. Tier 6 members and reti-
       rees would be required to make a payment of six percent  of  their  most
       recent compensation per year of additional service credit.
         If this bill is enacted, insofar as this proposal affects the New York
       State and Local Employees' Retirement System (ERS), it is estimated that
       the  past service cost will average approximately 12% (9% for Tier 6) of
       an affected members' compensation for each year  of  additional  service
       credit  that  is purchased. For members who retired on or after December
       21, 1998 there would be additional costs for payments which will be paid
       retroactive to their date of retirement.
         Insofar as this proposal affects the New York State and  Local  Police
       and Fire Retirement System (PFRS), it is estimated that the past service
       cost  will  average  approximately  17%  (14% for Tier 6) of an affected
       members' compensation for  each  year  of  additional  service  that  is
       purchased.  For  members who retired on or after December 21, 1998 there
       would be additional costs for payments which will be paid retroactive to
       their date of retirement.
         The exact number of current members as  well  as  future  members  who
       could be affected by this legislation cannot be readily determined.
         As  this  legislation states "None of the provisions of this act shall
       be subject to Section 25 of the Retirement  and  Social  Security  Law",
       these  past  service  costs would be shared by the State of New York and
       the participating employers in the ERS and the PFRS.
         Summary of relevant resources:
         The membership data used in  measuring  the  impact  of  the  proposed
       change  was  the same as that used in the March 31, 2013 actuarial valu-
       ation.  Distributions and other statistics can  be  found  in  the  2013
       Report  of  the  Actuary  and  the  2013  Comprehensive Annual Financial
       Report.
         The actuarial assumptions and methods used are described in the  2010,
       2011,  2012  and  2013  Annual  Report  to  the Comptroller on Actuarial
       Assumptions, 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, 2013
       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 estimate, dated October 28, 2013 and intended for use only during
       the 2014 Legislative Session, is Fiscal Note No.  2014-12,  prepared  by
       the  Actuary  for  the  New  York  State and Local Employees' Retirement
       System and the New York State  and  Local  Police  and  Fire  Retirement
       System.
         FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
         This  bill would amend subdivision 2 of Section 1000 of the Retirement
       and Social Security Law to add Afghanistan to the list  of  theaters  of
       operations  in  which a member of a public retirement system of New York
       State may claim service credit. A member may claim service credit for up
       to three years of military service performed during hostilities  partic-
       ipated  in  by the military forces of the United States, from the second
       S. 5745--B                          3
       day of August, nineteen hundred ninety, to the end of such  hostilities.
       A  member must have at least five years of credited service to be eligi-
       ble and make application for such credit before the  effective  date  of
       retirement.  To  obtain  such  credit,  a  member  must make payments as
       required in Section 1000 of the Retirement and Social Security Law. Tier
       1, 2, 3, 4 and 5 members are required to pay  three  percent  of  salary
       earned  during the twelve months of credited service immediately preced-
       ing the year in which a claim is made for each year of military service.
       Tier 6 members are required to pay six percent of salary  earned  during
       the  twelve months of credited service immediately preceding the year in
       which a claim is made for each year of military service. This act  shall
       take  effect  immediately and shall be deemed to have been in full force
       and effect on and after December 21, 1998.
         It is not possible to determine the total annual cost to the employers
       of members of the New York State Teachers' Retirement System  since  the
       total  amount  of  service credit which would be claimed under this bill
       cannot be estimated. However, the cost to the employers  of  members  of
       the  New  York  State  Teachers'  Retirement  System  is estimated to be
       $21,700 per year of service credited for Tier 1 and 2  members,  $20,500
       per  year of service credited for Tier 3 and 4 members, $20,400 per year
       of service credited for Tier 5 members and $15,000 per year  of  service
       credited  for  Tier 6 members if this bill is enacted. These costs would
       be offset by member payments required under Section 1000 of the  Retire-
       ment  and  Social Security Law. The cost is estimated to be, on average,
       approximately $75,000 for each retired member  claiming  service  credit
       under this bill if enacted, including payments retroactive to their date
       of retirement.
         The  source of this estimate is Fiscal Note 2014-17 dated February 24,
       2014 prepared by the Actuary of the New York State Teachers'  Retirement
       System and is intended for use only during the 2014 Legislative Session.
       I,  Richard  A.  Young,  am the Actuary for the New York State Teachers'
       Retirement System. I am a member of the American  Academy  of  Actuaries
       and  I meet Qualification Standards of the American Academy of Actuaries
       to render the actuarial opinion contained herein.
         FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
         PROVISIONS OF PROPOSED LEGISLATION: With respect to the New York  City
       Retirement  Systems  ("NYCRS"), the proposed legislation would amend New
       York State Retirement and Social Security Law ("RSSL") Section  1000  to
       provide  members  of  the  New  York  City  Employees' Retirement System
       ("NYCERS"), the New York City Teachers'  Retirement  System  ("NYCTRS"),
       the New York City Board of Education Retirement System ("BERS"), the New
       York  City  Police Pension Fund ("POLICE") and the New York Fire Depart-
       ment Pension Fund ("FIRE") the opportunity to obtain additional  retire-
       ment  service  credits,  up  to  three  years  (inclusive  of  any prior
       purchases of military service credit), for military service in Afghanis-
       tan from August 2, 1990 to the end of such hostilities, provided certain
       conditions are met.
         In order to purchase such military service, a member would be required
       to:
         * Receive an honorable discharge from military service,
         * Make an application for these additional service  credits  prior  to
       the  date  of  retirement,  but  after completing five years of credited
       service (exclusive of the service credit that could be  purchased  under
       this proposed legislation), and
         *  Pay  the  appropriate  NYCRS,  for  each  year  of military service
       purchased, a sum equal to 3.0% (6.0% for members who first  join  on  or
       S. 5745--B                          4
       after  April  1,  2012)  of such member's compensation earned during the
       twelve months of credited service immediately preceding  the  date  that
       the member makes application for military service credit.
         The  Effective  Date  of the proposed legislation would be the date of
       enactment and shall be deemed to have been in full force and  effect  on
       and after December 21, 1998.
         The  Actuary  has  presumed  that retirees as of the enactment of this
       proposed legislation would not be eligible to purchase additional  mili-
       tary service provided by this proposed legislation.
         IMPACT ON BENEFITS: For purposes of the respective NYCRS, each year of
       military  service  credit  purchased  would  apply  toward providing the
       member with a year of  benefit  accrual  under  the  particular  benefit
       formula covering the member.
         In  certain  circumstances, the member also may be entitled to utilize
       such military service as  qualifying  service  for  benefit  eligibility
       purposes.
         For purposes of this Fiscal Note, it has been assumed that members who
       purchase  military  service in accordance with this proposed legislation
       would generally be entitled to count such service  for  benefit  accrual
       purposes and for the purpose of qualifying for benefits.
         MEMBERS  IMPACTED: Insofar as this proposed legislation relates to the
       NYCRS, the number of members who could  potentially  benefit  from  this
       proposed legislation cannot be readily determined.
         For  illustrative  purposes  only,  a table is included presenting the
       estimated financial impact if 100 members  in  each  of  the  NYCRS  are
       eligible and each member purchases 2.5 years of service.
         FINANCIAL IMPACT - OVERVIEW: With respect to an individual member, the
       additional  cost  of  this  proposed  legislation  would  depend  on the
       member's length of service not  including  the  military  service  being
       purchased,  the  years  of military service being purchased, age, salary
       history and Plan in which the member participates.
         With respect to employers participating in  the  NYCRS,  the  ultimate
       employer  cost  of  this proposed legislation would be determined by the
       increase in benefits to be paid, the impact of certain benefits commenc-
       ing earlier, shorter working lifetimes  and  the  reduction  in  certain
       future member contributions.
         FINANCIAL IMPACT - ACTUARIAL PRESENT VALUES: With respect to the NYCRS
       and  based  on  the census data and assumptions herein, the enactment of
       this proposed legislation would increase  the  Actuarial  Present  Value
       ("APV")  of  benefits  ("APVB")  by  approximately  $13,400  for NYCERS,
       $13,200 for NYCTRS, $8,100 for BERS, $22,900 for POLICE and $26,500  for
       FIRE per year of service credit purchased as of June 30, 2014.
         In  addition,  with  respect  to  the  NYCRS, the APV of future member
       contributions (primarily attributable to the payments of 3.0% of  salary
       by  members  who  first joined prior to April 1, 2012 and 6.0% of salary
       for members who first joins on or after April 1, 2012 per year of  mili-
       tary  service  purchased)  would  increase  by  approximately $2,100 for
       NYCERS, $2,300 for NYCTRS, $1,300 for BERS, $3,300 for POLICE and $3,400
       for FIRE per year of service credit purchased as of June 30, 2014.
         Consequently, with respect to the NYCRS, the APV of net future employ-
       er contributions would increase by  approximately  $11,300  for  NYCERS,
       $10,900  for NYCTRS, $6,800 for BERS, $19,600 for POLICE and $23,100 for
       FIRE per year of service credit purchased as of June 30, 2014.
         FINANCIAL IMPACT  -  ADDITIONAL  EMPLOYER  COSTS:  Enactment  of  this
       proposed  legislation  would increase employer costs, where such amounts
       depend on the number of members affected and upon the amount of military
       S. 5745--B                          5
       service being credited as well as other  characteristics  including  the
       age, salary history and Plan in which the member participates.
         With  respect  to  the NYCRS, based on the Actuary's actuarial assump-
       tions and methods in effect as of June 30, 2013, the enactment  of  this
       proposed  legislation  is estimated to increase annual employer costs by
       approximately $1,300 for NYCERS,  $1,300  FOR  NYCTRS,  $800  for  BERS,
       $2,300  for  POLICE  and  $2,700  for  FIRE  per  year of service credit
       purchased as of June 30, 2014.
         FINANCIAL IMPACT - ADDITIONAL EMPLOYER CONTRIBUTIONS: With respect  to
       the  NYCRS,  increases  in employer contributions would depend upon when
       the members purchase the military  service  permitted  by  the  proposed
       legislation  and  such  service  is credited to their records, but would
       ultimately be comparable to the increases in employer costs.
         FINANCIAL IMPACT - SUMMARY: The following table summarizes  the  esti-
       mated  financial impact of this proposed legislation on the NYCRS assum-
       ing 100 members in each System are eligible and each purchases 2.5 years
       of service:
               Estimated Financial Impact to Allow Members of the NYCRS
                 To Purchase Certain Years of Military Service Credit
                                  as of June 30, 2014
                          (Assumes 100 Members in Each System
                          Purchase 2.5 Years of Service Each)
                                     ($ Millions)
                                                              Estimated
                                          Additional          Additional
                                          APV of Future       Annual
       Retirement     Additional          Employer            Employer
       System         APV of Benefits     Contributions[1]    Costs[2]
       NYCERS         $ 3.36              $ 2.82              $ 0.33
       NYCTRS           3.31                2.73                0.32
       BERS             2.01                1.69                0.20
       POLICE           5.72                4.90                0.58
       FIRE             6.63                5.77                0.68
         [1] Equals Increase in APVB minus Increase in  APV  of  future  member
              contributions.
         [2]  Estimated Additional Annual Employer Costs are determined without
             regard to the funded status of the Retirement Systems  and  repre-
             sent the best estimates of the ultimate annual financial burden of
             the  proposed  legislation  and  assume that any additional APV of
             Future Employer Contributions, as they  arise,  are  amortized  as
             actuarial losses over 15 years (14 payments). Estimated Additional
             Annual  Employer  Contributions would ultimately approximate esti-
             mated Additional Annual Employer Costs.
         ADDITIONAL EMPLOYER COSTS - GENERAL: In general, the real cost of  the
       enactment  of  this  proposed legislation would be the addition benefits
       paid.
       S. 5745--B                          6
         OTHER COSTS: The enactment of this proposed legislation  would  result
       in  some administrative expenses for the NYCRS and costs for Other Pose-
       Employment Benefits ("OPEB").
         CENSUS  DATE: The census data use for estimates of APV of benefits and
       employer contributing presented herein are the active  members  included
       in the June 30, 2013 (Lag) actuarial valuations of NYCERS, NYCTRS, BERS,
       POLICE  and  FIRE  used  to  determine  the Preliminary Fiscal Year 2015
       employer contributions.
         ACTUARIAL ASSUMPTIONS AND METHODS: The additional APV of benefits  and
       employer  contributions  presented herein have been estimated as of June
       30, 2014 on a hypothetical basis with each eligible member purchasing an
       average of 2.5 years of military service.
         A more robust analysis would also use various approximating techniques
       and assumptions by the Actuary, including, but not limited to:
         * A certain percentage of veterans being honorably discharged.
         * A certain percentage of honorably discharged  veterans  being  disa-
       bled.
         * Varying percentages of members of each of the NYCRS with prior mili-
       tary service.
         As  benefiting  from  the  provisions  of this proposed legislation is
       dependent upon actions by Plan members and the  timing  and  amounts  of
       miliary  service to be purchased are unknown, the financial impact would
       likely be realized upon receipt by the Actuary of updated service credit
       information.
         Consequently, changes in employer contributions  have  been  estimated
       assuming  the increase in the APV of Future Employer Contributions would
       be financed over a time period comparable to  that  used  for  actuarial
       losses  under  the Entry Age Actuarial Cost Method. Using this approach,
       the Additional APV of Future Employer Contributions would  be  amortized
       over  a  closed 15-year period (14 payments under One-Year Lag Methodol-
       ogy) using level dollar payments.
         ECONOMIC VALUES OF BENEFITS: The actuarial assumptions used to  deter-
       mine  the financial impact of the proposed legislation discussed in this
       Fiscal Note are those appropriate for budgetary models  and  determining
       annual employer contributions to the NYCRS.
         However, the economic assumptions (current and proposed) that are used
       for  determining  employer  contributions  do not develop risk-adjusted,
       economic values of benefits.  Such  risk-adjusted,  economic  values  of
       benefits  would  likely differ significantly from those developed by the
       budgetary models.
         STATEMENT OF ACTUARIAL OPINION: I, Robert C. North, Jr., am the  Chief
       Actuary  for  the  New York City Retirement System. 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.
         FISCAL NOTE IDENTIFICATION: This estimate is  intended  for  use  only
       during  the  2014  Legislative Session. It is Fiscal Note 2014-06, dated
       February 12, 2014, prepared by the Chief Actuary for the New  York  City
       Employees'  Retirement  System,  the  New York City Teachers' Retirement
       System, the New York City Board of Education Retirement System, the  New
       York  City  Police Pension Fund and the New York Fire Department Pension
       Fund.
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