S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                 10324--A
 
                           I N  A S S E M B L Y
 
                              April 10, 2018
                                ___________
 
 Introduced  by M. of A. DenDEKKER, COLTON -- Multi-Sponsored by -- M. of
   A. McDONOUGH -- read once and referred to  the  Committee  on  Govern-
   mental  Employees  --  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:
 
   Section 1. Section 1000 of the retirement and social security  law  is
 amended by adding a new subdivision 8-a to read as follows:
   8-A.  A  PERSON  WHO  RETIRED  PRIOR TO MAY THIRTY-FIRST, TWO THOUSAND
 SIXTEEN AND WHO WOULD HAVE BEEN  ENTITLED  TO  THE  PROVISIONS  OF  THIS
 SECTION,  MAY  MAKE  APPLICATION TO SUCH RETIREMENT SYSTEM NO LATER THAN
 DECEMBER THIRTY-FIRST, TWO THOUSAND NINETEEN FOR A SUPPLEMENTAL MILITARY
 RETIREMENT ALLOWANCE PURSUANT TO THIS  SUBDIVISION.    THE  SUPPLEMENTAL
 RETIREMENT  ALLOWANCE  PROVIDED  BY THIS SUBDIVISION SHALL BE IN LIEU OF
 ANY BENEFIT OTHERWISE PROVIDED PURSUANT TO THIS SECTION AND  ANY  CREDIT
 GRANTED  FOR  MILITARY  SERVICE WITH ANY RETIREMENT SYSTEM OF THIS STATE
 PURSUANT TO ANY OTHER SECTION OF LAW.  UPON RECEIPT OF  AN  APPLICATION,
 THE  RETIREMENT SYSTEM SHALL DETERMINE THE AMOUNT OF SERVICE CREDIT SUCH
 PERSON WOULD HAVE BEEN ENTITLED TO RECEIVE PURSUANT TO SUBDIVISIONS  ONE
 AND  TWO  OF  THIS SECTION, SUBJECT TO THE LIMITATIONS CONTAINED IN THIS
 SECTION. THE SUPPLEMENTAL MILITARY RETIREMENT ALLOWANCE SHALL EQUAL  THE
 RETIREMENT ALLOWANCE OF SUCH PERSON, COMPUTED WITHOUT OPTIONAL MODIFICA-
 TION  AND  NOT TO EXCEED FIFTEEN THOUSAND DOLLARS, MULTIPLIED BY TWENTY-
 FIVE ONE-HUNDREDTHS OF ONE PERCENT PER MONTH OF THE  SERVICE  CREDIT  AS
 DETERMINED  PURSUANT  TO  THIS SUBDIVISION.   ONE-TWELFTH OF THE SUPPLE-
 MENTAL MILITARY RETIREMENT ALLOWANCE SHALL BE ADDED  TO  THE  RETIREMENT
 ALLOWANCE  OF  SUCH  PERSON  EACH MONTH. THE BENEFIT PAYABLE PURSUANT TO
 THIS SECTION SHALL COMMENCE ON THE NEXT RETIREMENT ALLOWANCE PAYABLE  AT
 LEAST  THIRTY DAYS AFTER THE RECEIPT OF AN APPLICATION FROM SUCH PERSON.
 FOR THE PURPOSES OF THIS SUBDIVISION, RETIREMENT ALLOWANCE SHALL EXCLUDE
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
              

                       [ ] is old law to be omitted.
                                                            LBD08584-10-8

 A. 10324--A                         2
 
 ANY ANNUITY DERIVED FROM VOLUNTARY CONTRIBUTIONS MADE BY THE INDIVIDUAL,
 EXCEPT THOSE MADE PURSUANT TO ELECTIONS UNDER SUBDIVISION ONE OF SECTION
 FIVE HUNDRED ELEVEN-A OR PARAGRAPH C OF  SUBDIVISION  THREE  OF  SECTION
 FIVE HUNDRED SIXTEEN OF THE EDUCATION LAW, BUT SHALL INCLUDE ANY COST OF
 LIVING  ADJUSTMENT  DERIVED  FROM  SECTIONS  SEVENTY-EIGHT-A  AND  THREE
 HUNDRED SEVENTY-EIGHT-A OF THIS CHAPTER OR SECTION FIVE HUNDRED  THIRTY-
 TWO-A OF THE EDUCATION LAW, AS APPLICABLE.  THE BENEFIT PAYABLE PURSUANT
 TO  THIS SUBDIVISION SHALL BE PAYABLE FOR THE LIFE OF THE RETIRED MEMBER
 ONLY, EXCEPT THAT THE SURVIVING SPOUSE OF A DECEASED MEMBER WHO  RETIRED
 UNDER  AN  OPTION  PROVIDING  A  BENEFIT TO BE CONTINUED FOR LIFE TO THE
 SURVIVING SPOUSE AFTER THE DEATH OF THE  MEMBER  SHALL  BE  ENTITLED  TO
 RECEIVE  FIFTY  PERCENT  OF  THE MONTHLY BENEFIT THAT THE RETIRED MEMBER
 WOULD BE RECEIVING PURSUANT TO THIS SUBDIVISION, IF  LIVING,  COMMENCING
 WITH  THE  NEXT  RETIREMENT ALLOWANCE PAYABLE AT LEAST THIRTY DAYS AFTER
 RECEIPT OF AN APPLICATION FROM THE RETIRED MEMBER  FOR  THE  BENEFIT  OR
 PAYABLE AFTER THE DEATH OF THE RETIRED MEMBER.
   §  2. Subdivision b of section 78-a of the retirement and social secu-
 rity law, as added by chapter 125 of the laws of  2000,  is  amended  to
 read as follows:
   b.  Said cost-of-living adjustment shall be a percentage of the annual
 retirement  allowance  otherwise  payable,  computed  without   optional
 modification,  but  including  any benefit derived from subdivision f of
 this section [and], any prior year's cost-of-living  adjustment  derived
 from this section AND THE AMOUNT OF ANY SUPPLEMENTAL MILITARY RETIREMENT
 ALLOWANCE  DERIVED  FROM  SUBDIVISION EIGHT-A OF SECTION ONE THOUSAND OF
 THIS CHAPTER. Said percentage is set forth  in  subdivision  d  of  this
 section.
   § 3. Subdivision b of section 378-a of the retirement and social secu-
 rity  law,  as  added  by chapter 125 of the laws of 2000, is amended to
 read as follows:
   b. Said cost-of-living adjustment shall be a percentage of the  annual
 retirement   allowance  otherwise  payable,  computed  without  optional
 modification, but including any benefit derived from  subdivision  f  of
 this  section  [and], any prior year's cost-of-living adjustment derived
 from this section AND THE AMOUNT OF ANY SUPPLEMENTAL MILITARY RETIREMENT
 ALLOWANCE DERIVED FROM SUBDIVISION EIGHT-A OF SECTION  ONE  THOUSAND  OF
 THIS  CHAPTER.    Said  percentage is set forth in subdivision d of this
 section.
   § 4. Subdivision b of section 532-a of the education law, as added  by
 chapter 125 of the laws of 2000, is amended to read as follows:
   b.  Said cost-of-living adjustment shall be a percentage of the annual
 retirement  allowance  otherwise  payable,  computed  without   optional
 modification, excluding any annuity derived from voluntary contributions
 made  by members, except those made pursuant to elections under subdivi-
 sion one of section five hundred eleven-a or paragraph c of  subdivision
 three of section five hundred sixteen of this article, but including any
 benefit  derived  from  subdivision  f  of this section [and], any prior
 year's cost-of-living adjustment  derived  from  this  section  AND  THE
 AMOUNT  OF  ANY  SUPPLEMENTAL MILITARY RETIREMENT ALLOWANCE DERIVED FROM
 SUBDIVISION EIGHT-A OF SECTION ONE THOUSAND OF THE RETIREMENT AND SOCIAL
 SECURITY LAW. Said percentage is set forth  in  subdivision  d  of  this
 section.
   § 5. Subdivision b of section 13-696 of the administrative code of the
 city  of  New  York,  as  added  by  chapter 125 of the laws of 2000, is
 amended to read as follows:

 A. 10324--A                         3
 
   b. Said cost-of-living adjustment shall be a percentage of the  annual
 fixed  retirement allowance otherwise payable, computed without optional
 modification, but including any benefit derived from  subdivision  f  of
 this  section  [and], any prior year's cost-of-living adjustment derived
 from  this section AND THE AMOUNT OF ANY SUPPLEMENTAL MILITARY ALLOWANCE
 DERIVED FROM SUBDIVISION EIGHT-A OF SECTION ONE THOUSAND OF THE  RETIRE-
 MENT  AND SOCIAL SECURITY LAW.  Said percentage is set forth in subdivi-
 sion d of this section.
   § 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.
   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

 A. 10324--A                         4
 
 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 13-696
 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,

 A. 10324--A                         5
 
   *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                                      16.3
 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)

 A. 10324--A                         6
 
 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.