Bill Text: NY S06082 | 2021-2022 | General Assembly | Amended
Bill Title: Relates to primary social security retirement benefits for certain members; provides that in the computation of the normal service retirement benefit of members of the New York city fire department pension fund, there shall be no reduction for the primary social security retirement benefit.
Spectrum: Moderate Partisan Bill (Democrat 4-1)
Status: (Introduced - Dead) 2022-05-10 - REPORTED AND COMMITTED TO FINANCE [S06082 Detail]
Download: New_York-2021-S06082-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 6082--A 2021-2022 Regular Sessions IN SENATE April 7, 2021 ___________ Introduced by Sens. GOUNARDES, KAMINSKY, MARTUCCI -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions -- recommitted to the Committee on Civil Service and Pensions in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the retirement and social security law, in relation to primary social security retirement benefits for police/fire members who are members of the New York city fire department pension fund The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 505 of the retirement and social security law, as 2 amended by chapter 18 of the laws of 2012, is amended to read as 3 follows: 4 § 505. Service retirement benefits; police/fire members, New York city 5 uniformed correction/sanitation revised plan members and investigator 6 revised plan members. a. The normal service retirement benefit for 7 police/fire members, New York city uniformed correction/sanitation 8 revised plan members and investigator revised plan members at normal 9 retirement age shall be a pension equal to fifty percent of final aver- 10 age salary, less fifty percent of the primary social security retirement 11 benefit commencing at age sixty-two, as provided in section five hundred 12 eleven of this article, provided, however, that the computation of the 13 normal service retirement benefit of members of the New York city fire 14 department pension fund, shall not be reduced by the primary social 15 security retirement benefit commencing at age sixty-two as provided in 16 section five hundred eleven of this article. 17 b. The early service retirement benefit for police/fire members, New 18 York city uniformed correction/sanitation revised plan members and 19 investigator revised plan members shall be a pension equal to two and 20 one-tenths percent of final average salary times years of credited EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD08553-08-2S. 6082--A 2 1 service at the completion of twenty years of service or upon attainment 2 of age sixty-two, increased by one-third of one percent of final average 3 salary for each month of service in excess of twenty years, but not in 4 excess of fifty percent of final average salary, less fifty percent of 5 the primary social security retirement benefit commencing at age sixty- 6 two as provided in section five hundred eleven of this article, 7 provided, however, that New York city police/fire revised plan members, 8 New York city uniformed correction/sanitation revised plan members and 9 investigator revised plan members shall not be eligible to retire for 10 service prior to the attainment of twenty years of credited service, and 11 provided further that the early service retirement benefit of members of 12 the New York city fire department pension fund shall not be reduced by 13 the primary social security retirement benefit commencing at age sixty- 14 two as provided by section five hundred eleven of this article. 15 c. A police/fire member, a New York city uniformed 16 correction/sanitation revised plan member or an investigator revised 17 plan member who retires with twenty-two years of credited service or 18 less may become eligible for annual escalation of the service retirement 19 benefit if he or she elects to have the payment of his or her benefit 20 commence on the date he or she would have completed twenty-two years and 21 one month or more of service. In such event, the service retirement 22 benefit shall equal two percent of final average salary for each year of 23 credited service, less fifty percent of the primary social security 24 retirement benefit commencing at age sixty-two as provided in section 25 five hundred eleven of this article, provided, however, that the service 26 retirement benefit of members of the New York city fire department 27 pension fund shall not be reduced by the primary social security retire- 28 ment benefit commencing at age sixty-two as provided by section five 29 hundred eleven of this article. 30 § 2. Section 511 of the retirement and social security law is amended 31 by adding a new subdivision h to read as follows: 32 h. Notwithstanding any provision of law to the contrary, this section 33 shall not apply to members of the New York city fire department pension 34 fund who receive a service retirement benefit pursuant to section five 35 hundred five of this article or a deferred vested benefit pursuant to 36 section five hundred sixteen of this article. 37 § 3. Subdivision c of section 516 of the retirement and social securi- 38 ty law, as amended by chapter 18 of the laws of 2012, is amended to read 39 as follows: 40 c. The deferred vested benefit of police/fire members, New York city 41 police/fire revised plan members, New York city uniformed 42 correction/sanitation revised plan members or investigator revised plan 43 members shall be a pension commencing at early retirement age equal to 44 two and one-tenths percent of final average salary times years of cred- 45 ited service, less fifty percent of the primary social security retire- 46 ment benefit commencing at age sixty-two, as provided in section five 47 hundred eleven of this article, provided however that the deferred vest- 48 ed benefit of members of the New York city fire department pension fund 49 and revised plan members who are members of the New York city fire 50 department pension fund shall not be reduced by the primary social secu- 51 rity retirement benefit commencing at age sixty-two as provided by 52 section five hundred eleven of this article. A police/fire member, a New 53 York city police/fire revised plan member, a New York city uniformed 54 correction/sanitation revised plan member or investigator revised plan 55 member may elect to receive his or her vested benefit commencing at 56 early retirement age or age fifty-five. If the vested benefit commencesS. 6082--A 3 1 before early retirement age, the benefit shall be reduced by one-fif- 2 teenth for each year, if any, that the member's early retirement age is 3 in excess of age sixty, and by one-thirtieth for each additional year by 4 which the vested benefit commences prior to early retirement age. If 5 such vested benefit is deferred until after such member's normal retire- 6 ment age, the benefit shall be computed and subject to annual escalation 7 in the same manner as provided for an early retirement benefit pursuant 8 to subdivision c of section five hundred five of this article. 9 § 4. Notwithstanding the provisions of section 13-379 of the adminis- 10 trative code of the city of New York, the provisions of this act shall 11 apply to chapter three of title thirteen of the administrative code of 12 the city of New York. 13 § 5. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: SUMMARY OF BILL: This proposed legislation would amend Sections 505, 511, and 516 of the Retirement and Social Security Law (RSSL) to elimi- nate the offset equal to 50% of the primary social security benefit in the service, early service, and vested retirement benefits for Tier 3 original, modified, and enhanced plan members of the New York City Fire Pension Fund (FIRE). Effective Date: Upon enactment. IMPACT ON BENEFITS: Currently, the Tier 3 normal service retirement, early service retirement, and vested retirement benefits are subject to an offset equal to 50% of the primary social security benefit as defined in RSSL Section 511 beginning at age 62. Under the proposed legislation, if enacted, the offset for such bene- fits would be eliminated resulting in an increase in benefits. FINANCIAL IMPACT - SUMMARY: The financial impact will increase as the impacted populations of Tier 3 members of FIRE increases over time. The estimated financial impact of removing the social security offset as described above results in an increase in Present Value of Future Bene- fits (PVFB) and an increase in the annual employer contributions of FIRE. The estimate of these increases for Fiscal Years 2023 through 2027 based on the applicable actuarial assumptions and methods noted herein, are shown in the table below. Fiscal Increase in Increase in Year Present Value of Future Benefits Employer Contributions ($ Millions) ($ Millions) 2023 $72.5 $4.8 2024 $85.2 $5.4 2025 $98.9 $6.0 2026 $113.5 $6.6 2027 $129.1 $7.2 In accordance with Section 13-638.2(k-2) of the Administrative Code of the City of New York (ACCNY), 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 30, 2021, the remaining working lifetime of FIRE members subject to Article 14 is approximately 20 years. For the purposes of this Fiscal Note, the increase in the UAL for FIRE was amortized over a 20-year period (19 payments under the One-Year Lag Methodology (OYLM)) using level dollar payments. CONTRIBUTION TIMING: For the purposes of this Fiscal Note, it is assumed that the changes in the PVFB and annual employer contributions would be reflected for the first time in the Final June 30, 2021 actuar-S. 6082--A 4 ial valuation of 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 valuation of FIRE to determine the Preliminary Fiscal Year 2023 employer contrib- utions. The 3,973 active FIRE Tier 3 members as of June 30, 2021 had an aver- age 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 PVFB and annual employer contributions presented herein have been calculated based on the actuarial assumptions and methods in effect for the June 30, 2021 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year 2023 employer contributions of FIRE. 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 that will be 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 FIRE and other exogenous factors such as investment, contribution, and other risks. If actual experience deviates from actuarial assumptions, the actual costs could differ from those presented herein. Costs are also dependent on the actuarial meth- ods 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 FIRE and other New York City agencies to implement the proposed legislation. * Pension costs for future members of FIRE hired on or after 7/1/2025. * The impact of this proposed legislation on Other Postemployment Benefit (OPEB) costs. * Cost analyses relating to provisions contained in RSSL Section 500(c). 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 2022-07 dated March 24, 2022 was prepared by the Interim Chief Actuary for the New York City Fire Pension Fund. This estimate is intended for use only during the 2022 Legislative Session.