Bill Text: NY S06505 | 2017-2018 | General Assembly | Amended
Bill Title: Relates to supplemental military retirement allowances for members of public retirement systems of the state.
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2018-06-20 - COMMITTED TO RULES [S06505 Detail]
Download: New_York-2017-S06505-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 6505--B 2017-2018 Regular Sessions IN SENATE May 26, 2017 ___________ Introduced by Sens. LARKIN, CARLUCCI, GALLIVAN, JACOBS, VALESKY -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions -- recommitted to the Commit- tee 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 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee AN ACT to amend the retirement and social security law, the education law and the administrative code of the city of New York, in relation to supplemental military retirement allowances for members of public retirement systems of the state The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Section 1000 of the retirement and social security law is 2 amended by adding a new subdivision 8-a to read as follows: 3 8-a. A person who retired prior to May thirty-first, two thousand 4 sixteen and who would have been entitled to the provisions of this 5 section, may make application to such retirement system no later than 6 December thirty-first, two thousand nineteen for a supplemental military 7 retirement allowance pursuant to this subdivision. The supplemental 8 retirement allowance provided by this subdivision shall be in lieu of 9 any benefit otherwise provided pursuant to this section and any credit 10 granted for military service with any retirement system of this state 11 pursuant to any other section of law. Upon receipt of an application, 12 the retirement system shall determine the amount of service credit such 13 person would have been entitled to receive pursuant to subdivisions one 14 and two of this section, subject to the limitations contained in this 15 section. The supplemental military retirement allowance shall equal the 16 retirement allowance of such person, computed without optional modifica- 17 tion and not to exceed fifteen thousand dollars, multiplied by twenty- EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD08584-09-8S. 6505--B 2 1 five one-hundredths of one percent per month of the service credit as 2 determined pursuant to this subdivision. One-twelfth of the supple- 3 mental military retirement allowance shall be added to the retirement 4 allowance of such person each month. The benefit payable pursuant to 5 this section shall commence on the next retirement allowance payable at 6 least thirty days after the receipt of an application from such person. 7 For the purposes of this subdivision, retirement allowance shall exclude 8 any annuity derived from voluntary contributions made by the individual, 9 except those made pursuant to elections under subdivision one of section 10 five hundred eleven-a or paragraph c of subdivision three of section 11 five hundred sixteen of the education law, but shall include any cost of 12 living adjustment derived from sections seventy-eight-a and three 13 hundred seventy-eight-a of this chapter or section five hundred thirty- 14 two-a of the education law, as applicable. The benefit payable pursuant 15 to this subdivision shall be payable for the life of the retired member 16 only, except that the surviving spouse of a deceased member who retired 17 under an option providing a benefit to be continued for life to the 18 surviving spouse after the death of the member shall be entitled to 19 receive fifty percent of the monthly benefit that the retired member 20 would be receiving pursuant to this subdivision, if living, commencing 21 with the next retirement allowance payable at least thirty days after 22 receipt of an application from the retired member for the benefit or 23 payable after the death of the retired member. 24 § 2. Subdivision b of section 78-a of the retirement and social secu- 25 rity law, as added by chapter 125 of the laws of 2000, is amended to 26 read as follows: 27 b. Said cost-of-living adjustment shall be a percentage of the annual 28 retirement allowance otherwise payable, computed without optional 29 modification, but including any benefit derived from subdivision f of 30 this section [and], any prior year's cost-of-living adjustment derived 31 from this section and the amount of any supplemental military retirement 32 allowance derived from subdivision eight-a of section one thousand of 33 this chapter. Said percentage is set forth in subdivision d of this 34 section. 35 § 3. Subdivision b of section 378-a of the retirement and social secu- 36 rity law, as added by chapter 125 of the laws of 2000, is amended to 37 read as follows: 38 b. Said cost-of-living adjustment shall be a percentage of the annual 39 retirement allowance otherwise payable, computed without optional 40 modification, but including any benefit derived from subdivision f of 41 this section [and], any prior year's cost-of-living adjustment derived 42 from this section and the amount of any supplemental military retirement 43 allowance derived from subdivision eight-a of section one thousand of 44 this chapter. Said percentage is set forth in subdivision d of this 45 section. 46 § 4. Subdivision b of section 532-a of the education law, as added by 47 chapter 125 of the laws of 2000, is amended to read as follows: 48 b. Said cost-of-living adjustment shall be a percentage of the annual 49 retirement allowance otherwise payable, computed without optional 50 modification, excluding any annuity derived from voluntary contributions 51 made by members, except those made pursuant to elections under subdivi- 52 sion one of section five hundred eleven-a or paragraph c of subdivision 53 three of section five hundred sixteen of this article, but including any 54 benefit derived from subdivision f of this section [and], any prior 55 year's cost-of-living adjustment derived from this section and the 56 amount of any supplemental military retirement allowance derived fromS. 6505--B 3 1 subdivision eight-a of section one thousand of the retirement and social 2 security law. Said percentage is set forth in subdivision d of this 3 section. 4 § 5. Subdivision b of section 13-696 of the administrative code of the 5 city of New York, as added by chapter 125 of the laws of 2000, is 6 amended to read as follows: 7 b. Said cost-of-living adjustment shall be a percentage of the annual 8 fixed retirement allowance otherwise payable, computed without optional 9 modification, but including any benefit derived from subdivision f of 10 this section [and], any prior year's cost-of-living adjustment derived 11 from this section and the amount of any supplemental military allowance 12 derived from subdivision eight-a of section one thousand of the retire- 13 ment and social security law. Said percentage is set forth in subdivi- 14 sion d of this section. 15 § 6. This act shall take effect immediately. FISCAL NOTE.--Pursuant to Legislative Law, Section 50: This bill would amend section 1000 of the Retirement and Social Secu- rity Law by adding a new subdivision 8-a to allow eligible retired members of public retirement systems of New York State to receive a supplemental military retirement allowance based upon the retirement allowance of such member and up to three years of military service cred- it. This supplemental benefit would be in lieu of any benefit otherwise provided by military service credit. The annual supplemental military retirement allowance shall be equal to the retirement allowance of such person, computed without optional modification and not to exceed fifteen thousand dollars, multiplied by twenty-five one-hundredths of one percent per month of military service claimed. The surviving spouse of a deceased member who retired under an option which provides them with a continuing lifetime benefit would be entitled to receive fifty percent of the supplemental military retirement allowance that the retired member would have received. A member must have retired prior to May 31, 2016 and make application no later than December 31, 2019. This benefit is prospective only and shall commence with the next retirement allow- ance payable at least 30 days after the receipt of said application. There is no member cost for this benefit. 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 number of retired members who would be eligible for the supplemental military retirement allowance under this bill cannot be effectively estimated. However, the cost is estimated to be, on average, approxi- mately $12,300 for each retired member eligible for the supplemental military retirement allowance provided under this bill if enacted. Member data is from the System's most recent actuarial valuation files, consisting of data provided by the employers to the Retirement System. Data distributions and statistics can be found in the System's Comprehensive Annual Financial Report (CAFR). System assets are as reported in the System's financial statements, and can also be found in the CAFR. Actuarial assumptions and methods are provided in the System's Actuarial Valuation Report. The source of this estimate is Fiscal Note 2018-18 dated March 30, 2018 prepared by the Actuary of the New York State Teachers' Retirement System and is intended for use only during the 2018 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 the Qualification Standards of the American Academy of Actu- aries to render the actuarial opinion contained herein.S. 6505--B 4 FISCAL NOTE.-- This bill would amend Section 1000 of the Retirement and Social Security Law to give veterans who retired prior to May 31, 2016, a supplemental pension equal to their first $15,000 of single life allowance together with any cost of living adjustment, multiplied by 3% per year for up to three (3) years of such service credit for military service that would have been eligible if the member retired on or after such date. The surviving spouse of such a retired veteran who chose a continued life benefit to the spouse shall receive half of what the deceased member would have received. There would not be any payment required by an affected retiree or surviving spouse for this supple- mental pension. Such retiree may make application for the supplemental pension no later than December 31, 2019 and the payment of the benefit will begin with the next monthly pension payment payable at least 30 days after receipt of the application. The exact number of retirees that could be affected by this legis- lation cannot be readily determined. ERS Costs: Pursuant to Section 25 of the Retirement and Social Securi- ty Law, the increased cost to the New York State and Local Employees' Retirement System would be borne entirely by the State of New York and would require an itemized appropriation sufficient to pay the cost of the provision. Once a retiree applies for this benefit a cost will be generated, which will be billed to the State. PFRS Costs: These costs would be shared by the State of New York and the participating employers in 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, 2017 actuarial valu- ation. Distributions and other statistics can be found in the 2017 Report of the Actuary and the 2017 Comprehensive Annual Financial Report. The actuarial assumptions and methods used are described in the 2015, 2016, and 2017 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, 2017 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 March 9, 2018, and intended for use only during the 2018 Legislative Session, is Fiscal Note No. 2018-71, prepared by the Actuary for the New York State and Local Retirement System. FISCAL NOTE. -- The proposed legislation would amend Retirement and Social Security Law (RSSL) Section 1000 by adding a new subdivision 8-a to allow eligible retirees who retired from a public retirement system within the State prior to May 31, 2016, and who would have had qualify- ing military service had they been active members, to apply for a prospective supplemental military retirement allowance (Supplemental Retirement Allowance). For purposes of this Fiscal Note, "NYCRS" refers to the New York City Employees' Retirement System (NYCERS), the New York City Teachers' Retirement System (TRS), the New York City Board of Education Retirement System (BERS), the New York City Police Pension Fund (POLICE), and the New York City Fire Pension Fund (FIRE). With respect to the NYCERS, the proposed legislation would further amend Administrative Code of the City of New York (ACCNY) Section 13-696S. 6505--B 5 to include Cost-of-Living Adjustment (COLA) increases in the calculation and payment of such Supplemental Retirement Allowance. Effective Date: Upon enactment. BACKGROUND: A NYCERS retiree would be eligible to receive the Supple- mental Retirement Allowance (Eligible Recipient) if he or she: *Retired prior to May 31, 2016, *Would have otherwise met the current eligibility criteria of RSSL Section 1000, and *Files an application for such benefit by December 31, 2019. The Supplemental Retirement Allowance would be in lieu of any other retirement benefit provided for military service. For purposes of this Fiscal Note, it is assumed that the Supplemental Retirement Allowance is provided without cost to Eligible Recipients. IMPACT ON BENEFITS PAYABLE: With respect to NYCRS Eligible Recipients, the Supplemental Retirement Allowance would be payable as of the next retirement allowance payment following 30 days from filing an applica- tion for such benefit. The Supplemental Retirement Allowance would be payable for the Eligi- ble Recipient's lifetime, and payable, at 50% of the Eligible Recipi- ent's Supplemental Retirement Allowance rate, for the lifetime of an Eligible Recipient's surviving spouse who is eligible to receive a life- time retirement allowance benefit under an existing option election. The annual Supplemental Retirement Allowance would be equal to the retirement allowance of the Eligible Recipient (computed without optional modification, without certain annuities derived from voluntary contributions and not to exceed $15,000) multiplied by 0.25% for each month of qualifying military service (not to exceed 36 months). There- fore, the initial maximum Supplemental Retirement Allowance would not exceed $1,350 per year (i.e. $15,000 x 0.25% x 36 months = $1,350 per year), and would thereafter be subject to the COLA provisions, to the extent the total retirement allowance including Supplemental Retirement Allowance is less than $18,000 per year, provided by ACCNY Section 13-696. FINANCIAL IMPACT - OVERVIEW: The number of members who could poten- tially benefit from this proposed legislation cannot be determined. For illustrative purposes only, the table below presents the estimated financial impact assuming that, (1) the percentage of retirees that would benefit is the same percentage for each of the NYCRS as the percentage of active members that have purchased military service under Chapter 41 of the Laws of 2016 as of June 30, 2017, (2) that each member purchased 2.5 years of military service, (3) that each retiree's pension is equal to or greater than $15,000 per year, and (4) that the percent- age of those retirees who are receiving their pension in the form of a Joint and Survivor benefit is the same percentage as current retirees for each of the NYCRS. ESTIMATED FINANCIAL IMPACT FOR PROVIDING A SUPPLEMENTAL RETIREMENT ALLOWANCE TO CERTAIN RETIREES One-Time Increase Retirement System in Employer Contributions ($ Millions) NYCERS $ 3.8 TRS 0.8 BERS 0.1 POLICE 16.3S. 6505--B 6 FIRE 2.1 Total $23.1* *Any costs may be subject to State appropriation and reimbursement pursuant to RSSL Section 25. FINANCIAL IMPACT - EMPLOYER CONTRIBUTIONS: In accordance with the ACCNY Section 13-638.2(k-2), new Unfunded Accrued Liability (UAL) attributable to benefit changes are to be amortized as determined by the Actuary but generally over the remaining working lifetime of those impacted by the benefit changes. For this proposed legislation, since those that would benefit are retired, the entire increase in UAL would be recognized in the first year that the increased pension was paid. CONTRIBUTION TIMING: Increased pensions for the affected retirees would commence on the next retirement allowance payable at least thirty days after receipt of an application from such person. For purposes of this Fiscal Note, it is assumed that increased pensions would be reflected in the census data used in the June 30, 2018 actuarial valu- ations of NYCRS. Under the One-Year Lag Methodology, the first fiscal year in which these changes in benefits would impact employer contrib- utions would be Fiscal Year 2020. However, since Eligible Recipients have until December 31, 2019 to file an application for the additional service credit, the increased contributions would likely be spread out over Fiscal Years 2020, 2021, and 2022. OTHER COSTS: Not measured in the Fiscal Note are any possible increased administrative costs attributable to enactment of the proposed legislation. ACTUARIAL ASSUMPTIONS AND METHODS: In addition to the assumptions described in the Financial Impact - Overview section above, the changes in employer contributions presented herein have been calculated based on the same actuarial assumptions and methods in effect for the June 30, 2017 (Lag) actuarial valuation used to determine the Preliminary Fiscal Year 2019 employer contributions of NYCRS. Please note these assumptions and methods are subject to change as this valuation is not considered final until the end of the Fiscal Year 2019. STATEMENT OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu- ary for, and independent of, the New York City Retirement Systems and Pension Funds. I am a Fellow of the Society of Actuaries, an Enrolled Actuary under the Employee Retirement Income and Security Act of 1974 (ERISA), a Member of the American Academy of Actuaries, and a Fellow of the Conference of Consulting Actuaries. I meet the Qualification Stand- ards of the American Academy of Actuaries to render the actuarial opin- ion contained herein. To the best of my knowledge, the results contained herein have been prepared in accordance with generally accepted actuari- al principles and procedures and with the Actuarial Standards of Prac- tice issued by the Actuarial Standards Board. FISCAL NOTE IDENTIFICATION: This Fiscal Note 2018-24 dated May 2, 2018, was 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 City Fire Pension Fund. This esti- mate is intended for use only during the 2018 Legislative Session.