S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  8182--A
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               June 6, 2019
                                ___________
 
 Introduced  by  M.  of A. ABBATE, DARLING, BRAUNSTEIN, DINOWITZ, CUSICK,
   WEPRIN, SOLAGES, MALLIOTAKIS, PHEFFER AMATO, HEVESI, QUART, DenDEKKER,
   REYES, ORTIZ -- read once and referred to  the  Committee  on  Govern-
   mental  Employees  --  recommitted  to  the  Committee on Governmental
   Employees in accordance with Assembly Rule  3,  sec.  2  --  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
   service retirement benefits for members of the New  York  city  police
   pension fund
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 505 of the retirement and social security  law,  as
 amended  by  chapter  18  of  the  laws  of  2012, is amended to read as
 follows:
   § 505. Service retirement benefits; police/fire members, New York city
 uniformed correction/sanitation revised plan  members  and  investigator
 revised  plan  members.  a.  The  normal  service retirement benefit for
 police/fire  members,  New  York  city  uniformed  correction/sanitation
 revised  plan  members  and  investigator revised plan members at normal
 retirement age shall be a pension equal to fifty percent of final  aver-
 age salary, less fifty percent of the primary social security retirement
 benefit commencing at age sixty-two, as provided in section five hundred
 eleven  of  this  article,  EXCEPT THAT FOR MEMBERS OF THE NEW YORK CITY
 POLICE PENSION FUND, THE NORMAL SERVICE RETIREMENT BENEFIT SHALL NOT  BE
 REDUCED  BY THE PRIMARY SOCIAL SECURITY RETIREMENT BENEFIT COMMENCING AT
 AGE SIXTY-TWO AS  PROVIDED  IN  SECTION  FIVE  HUNDRED  ELEVEN  OF  THIS
 ARTICLE.
   b.  The  early service retirement benefit for police/fire members, New
 York city  uniformed  correction/sanitation  revised  plan  members  and
 investigator  revised  plan  members shall be a pension equal to two and

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD11505-10-0

 A. 8182--A                          2
 
 one-tenths percent of final  average  salary  times  years  of  credited
 service  at the completion of twenty years of service or upon attainment
 of age sixty-two, increased by one-third of one percent of final average
 salary  for  each month of service in excess of twenty years, but not in
 excess of fifty percent of final average salary, less fifty  percent  of
 the  primary social security retirement benefit commencing at age sixty-
 two as  provided  in  section  five  hundred  eleven  of  this  article,
 provided,  however, that New York city police/fire revised plan members,
 New York city uniformed correction/sanitation revised plan  members  and
 investigator  revised  plan  members shall not be eligible to retire for
 service prior to the attainment of twenty years of credited service, AND
 PROVIDED FURTHER THAT FOR MEMBERS OF THE NEW YORK  CITY  POLICE  PENSION
 FUND,  THE  EARLY SERVICE RETIREMENT BENEFIT SHALL NOT BE REDUCED BY THE
 PRIMARY SOCIAL SECURITY RETIREMENT BENEFIT COMMENCING AT  AGE  SIXTY-TWO
 AS PROVIDED IN SECTION FIVE HUNDRED ELEVEN OF THIS ARTICLE.
   c.    A    police/fire    member,    a   New   York   city   uniformed
 correction/sanitation revised plan member  or  an  investigator  revised
 plan  member  who  retires  with twenty-two years of credited service or
 less may become eligible for annual escalation of the service retirement
 benefit if he elects to have the payment of his benefit commence on  the
 date  he  would have completed twenty-two years and one month or more of
 service. In such event, the service retirement benefit shall  equal  two
 percent  of final average salary for each year of credited service, less
 fifty percent of the primary social security retirement benefit commenc-
 ing at age sixty-two as provided in section five hundred eleven of  this
 article,  EXCEPT  THAT  FOR  MEMBERS OF THE NEW YORK CITY POLICE PENSION
 FUND, THE SERVICE RETIREMENT BENEFIT SHALL NOT BE REDUCED BY THE PRIMARY
 SOCIAL SECURITY  RETIREMENT  BENEFIT  COMMENCING  AT  AGE  SIXTY-TWO  AS
 PROVIDED IN SECTION FIVE HUNDRED ELEVEN OF THIS ARTICLE.
   §  2. Section 511 of the retirement and social security law is amended
 by adding a new subdivision h to read as follows:
   H. THIS SECTION SHALL NOT APPLY TO MEMBERS OF THE NEW YORK CITY POLICE
 PENSION FUND WHO  RECEIVE  A  SERVICE  RETIREMENT  BENEFIT  PURSUANT  TO
 SECTION  FIVE  HUNDRED FIVE OF THIS ARTICLE OR A DEFERRED VESTED BENEFIT
 PURSUANT TO SECTION FIVE HUNDRED SIXTEEN OF THIS ARTICLE.
   § 3. Subdivision c of section 516 of the retirement and social securi-
 ty law, as amended by chapter 18 of the laws of 2012, is amended to read
 as follows:
   c. The deferred vested benefit of police/fire members, New  York  city
 police/fire    revised   plan   members,   New   York   city   uniformed
 correction/sanitation revised plan members or investigator revised  plan
 members  shall  be a pension commencing at early retirement age equal to
 two and one-tenths percent of final average salary times years of  cred-
 ited  service, less fifty percent of the primary social security retire-
 ment benefit commencing at age sixty-two, as provided  in  section  five
 hundred  eleven of this article, EXCEPT THAT FOR MEMBERS OF THE NEW YORK
 CITY POLICE PENSION FUND, THE SERVICE RETIREMENT BENEFIT  SHALL  NOT  BE
 REDUCED  BY THE PRIMARY SOCIAL SECURITY RETIREMENT BENEFIT COMMENCING AT
 AGE SIXTY-TWO AS  PROVIDED  IN  SECTION  FIVE  HUNDRED  ELEVEN  OF  THIS
 ARTICLE.  A police/fire member, a New York city police/fire revised plan
 member,  a  New  York  city uniformed correction/sanitation revised plan
 member or investigator revised plan member  may  elect  to  receive  his
 vested  benefit commencing at early retirement age or age fifty-five. If
 the vested benefit commences before early retirement  age,  the  benefit
 shall  be  reduced  by  one-fifteenth  for  each  year, if any, that the
 member's early retirement age is in excess of age  sixty,  and  by  one-

 A. 8182--A                          3
 
 thirtieth for each additional year by which the vested benefit commences
 prior  to early retirement age. If such vested benefit is deferred until
 after such member's normal retirement age, the benefit shall be computed
 and  subject  to annual escalation in the same manner as provided for an
 early retirement benefit pursuant  to  subdivision  c  of  section  five
 hundred five of this article.
   §  4.  This  act  shall take effect on the sixtieth day after it shall
 have become a law.
   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, revised, and enhanced plan members of the New York City Police
 Pension Fund (POLICE).
   Effective Date: Sixty days after 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 POLICE  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
 POLICE.  The  estimate  of these increases for Fiscal Years 2021 through
 2025 based on the applicable actuarial  assumptions  and  methods  noted
 herein, are shown in the table below.
                        Increase in                    Increase in
    Fiscal    Present Value of Future Benefits   Employer Contributions
     Year               ($ Millions)                   ($ Millions)
     2021                  $433.7                          $28.4
     2022                  $501.3                          $31.9
     2023                  $578.8                          $35.9
     2024                  $658.6                          $39.7
     2025                  $749.5                          $43.6
   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,  2018,  the
 remaining  working  lifetime  of POLICE members subject to Article 14 is
 approximately 19 years.
   For the purposes of this Fiscal Note, the  increase  in  the  UAL  for
 POLICE  was  amortized over a 19-year period (18 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  June  30,  2019  actuarial
 valuation  of  POLICE.  In  accordance  with  the OYLM used to determine
 employer contributions, the increase  in  employer  contributions  would
 first be reflected in Fiscal Year 2021.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2018 (Lag) actuarial valuations of

 A. 8182--A                          4
 
 POLICE to determine the Preliminary Fiscal Year 2020  employer  contrib-
 utions.
   There  are  14,419 active Tier 3 members of POLICE as of June 30, 2018
 and they have an  average  age  of  approximately  30.2  years,  average
 service  of  approximately  3.8 years, and an average salary of approxi-
 mately $80,900.
   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,  2018
 (Lag) actuarial valuations used to determine the Preliminary Fiscal Year
 2020 employer contributions of POLICE.
   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  used
 in  projections for the New York City Office of Management and Budget in
 April 2019 (Preliminary Projections). Projected headcounts for POLICE as
 of June 30, 2019 was compared to actual headcount and was determined  to
 be reasonable for this analysis.
   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  POLICE  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  methods 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 POLICE and other New
 York City agencies to implement the proposed legislation.
   * Pension costs for future members of POLICE hired after 7/1/2023.
   *  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, 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, a
 Member of the American Academy of Actuaries, and a Fellow of the Confer-
 ence of Consulting 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 2020-14 dated  March  18,
 2020  was  prepared  by  the  Chief Actuary for the New York City Police
 Pension Fund. This estimate is intended for use  only  during  the  2020
 Legislative Session.